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The roll-out of the Electricity Smart Meters in the EU
Why is Romania lagging behind?
Student: Alexandra-Mihaela Dobre Student number: 12305804
Email address: alexandra.dobre@student.uva.nl
Master track: European Competition Law and Regulation Supervisor: Dr. Kati Cseres
2 Abstract
The age of renewables is here and it has not come at once, but with sustained efforts and commitment from the EU’s institutions and Member States who have been promoting and implementing the envisaged policy for the past 30 years.
One of the main instruments used to enhance energy efficiency and to mark the transition from the conventional grid to the smart grid is represented by smart meters, an enhanced alternative to classic energy metering systems that function on the basis of a two-way information flow between energy consumers and energy companies, through a vast network infrastructure.
There is a difference in market penetration of smart meters from country to country across the EU, as the Member States have chosen to implement them at different speed and timeframes.
Given the fact that Romania is among the 17 EU Member States that decided to go for a full-scale smart meter roll-out in their countries, but by 2018, it had only reached a 4.8% implementation rate, the paper aims at analysing the general framework of the smart meters deployment in the EU, in general, and in Romania, in particular, in order to determine what the underlying factors behind Romania’s delay are.
Thus, through the methods of evaluation and comparison, the paper reaches the conclusion that the reasons range from the inadequate regulatory framework, to the precarious state of the distribution network towards which the investments need to be prioritised, in order for it to be kept in a functional state.
Consumers are also a very important factor, as they are either uninformed, dissatisfied with the fact they have to gradually cover the costs of the devices, or highly sceptical towards the actual effectiveness of the smart meters.
3 Table of Contents
Introduction
Chapter 1. Smart meters – concept, implementation and functionalities 1.1 The concept of smart meters
1.2 Implementation of the smart meters – How does it work?
1.3 What are the ultimate functionalities of smart meters and how are they related to consumers? Chapter 2. Legislation – the EU and Romania
2.1 The evolution of smart meters in the EU’s regulation and policy 2.2 An overview of the smart meters legislation in Romania
Chapter 3. Reports on smart meters’ roll-out in Romania and in other EU countries 3.1 Evolution of the actual roll-out in Romania
3.2 Where is Romania situated compared to other Member States? Chapter 4. Why is the roll-out of smart meters not taking off in Romania? 4.1 The national regulation problem
4.2 Overview of consumers’ concerns regarding the smart meters 4.2.1 Data protection/privacy issues
4.2.2 Health concerns and energy price increase 4.2.3 Are smart meters actually efficient?
Chapter 5. What are the lessons the EU should learn from Romania’s case? Chapter 6. Conclusion
4 Introduction
As it has been emphasized in the doctrine, “energy remains one of the most important topics within the EU” and “this field has formed a central part of the process of European integration from the very
beginning”.1
The transition from state-controlled monopolies to liberalised energy markets from the last decades has brought with it an abundance of regulatory material at EU level which converged towards environmental consciousness, sustainability, predictability and last, but not least the empowerment of
the final consumers2, who are now in charge more than ever, regarding their choice of energy
suppliers, consumption3 or even “clean energy” production.
The age of renewables4 is here and it has not come at once, but with sustained efforts and commitment
from the EU’s institutions and Member States who have been promoting and implementing the envisaged policy for the past 30 years.
One of the main instruments used by the EU to implement its policy of improving energy efficiency and to mark the transition from the conventional grid to the smart grid is represented by smart meters, an enhanced alternative to classic energy metering systems, that function on the basis of a two-way information flow between energy consumers and energy companies, through a vast network
infrastructure.5 This permits the former not only to monitor their consumption more accurately and
adjust their behaviour accordingly, but also to engage in the production of electricity from renewable resources, hence to become “prosumers”.
There is a difference in market penetration of smart meters from country to country across the EU, as the Member States have chosen to implement them at different speed and timeframes.
The paper aims at analysing the issue of smart meters’ roll-out in the EU, in general, and in Romania, in particular, through the methods of evaluation and comparison, in order to determine the reasons standing behind Romania’s underdeveloped smart meters deployment, to emphasize what lessons
should be learned from Romania’s case.6 There is a regulatory problem, with regard to the Energy
1 K. Talus, ‘Introduction to EU Energy Law’, Oxford University Press 2016, 2. The author also invokes the founding
Treaties (the Coal and Steel Community Treaty and the Atomic Energy Treaty) that had energy as their main focus and also the infamous Costa v Enel case 6/64, ECLI:EU:C:1964:66, through which the European Court of Justice made clear that the European Economic Community Treaty would also cover the energy field.
2 Final consumers include industry, services, transport, households, agriculture, forestry and fisheries.
3 European Commission, ‘Proposal for Directive of the European Parliament and of the Council amending Directives
96/92/EC and 98/30/EC concerning common rules for internal market in electricity and natural gas’ (2001) COM (2001) 125 final, 33.
4 Renewable energy sources include wind, solar, geothermal, biomass (such as biological waste and liquid biofuels),
hydro-electric and tidal energy. See ‘Share of renewable energy in the EU up to 17.5% in 2017’, 12 February 2019, available at
https://ec.europa.eu/eurostat/documents/2995521/9571695/8-12022019-AP-EN.pdf/b7d237c1-ccea-4adc-a0ba-45e13602b428.
5 A. Moreno-Munoz and J. J. Gonzalez de la Rosa, ‘Integrating power quality to automated meter reading’, IEEE Industrial
Electronics Magazine, vol. 2, no. 2, Jun 2008, 10–18.
6 According to Directive 2009/72/EC the EU’s target for 2020 was to have at least 80% of the consumers (households,
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Regulator’s policy, which rebounds to the protection of the final consumers in a way and also there is the issue with the consumers’ perception and attitude towards smart meters.
Answering the research question is important in providing an insight into some of the problems the EU faces in the process of implementing of its policy regarding the transition to clean energy. It must be noted that if the implementation of the EU’s policy does not take a smooth course in one of the Member States, it might cause disruption/fragmentation at EU level and hence defeat the purpose of the EU’s entire policy. The energy transition can only be achieved if all the countries are synchronized and reach the same level of development, in order for the smart grid to function properly.
The first chapter of the paper will emphasize what the notion of smart meters entails, who is responsible with their implementation and will bring forward the underlying functionalities the EU intended the smart meters to fulfil, while the second chapter brings an overview of the development of smart meters in the EU legislation, respectively how it has been translated into the Romanian legislative framework.
In the third chapter, the analysis will further disseminate different kind of reports,7 in order to establish
Romania’s position on smart metering systems implementation in comparison with other European countries.
The fourth chapter will analyse what is the reason for Romania’s lagging behind, ranging from the national regulation, to the network conditions and the attitude of consumers towards smart meters. The fifth chapter underlines the lessons the EU should learn from Romania’s case regarding the smart meters roll-out and the paper will end with a conclusion.
1. Smart meters – concept, implementation and functionalities 1.1 The concept of smart meters
As defined by the Commission itself in its Interpretative note on Directive 2009/72/EC8 a smart
metering system or intelligent metering system is “an electronic device that can measure the consumption of energy, adding more information than a conventional meter, and can transmit data using a form of electronic communication.
States that decided to go for a full-scale smart meter roll-out in their countries, but by 2018, it had only reached a 4.8% implementation rate, according to ANRE’s 2017 National Report, July 31st 2018, 209, available in Romanian at
<www.anre.ro>. The other 16 EU Member States are Austria, Denmark, Estonia, Finland, France, Great Britain, Greece, Ireland, Italy, Luxembourg, Latvia, Malta, the Netherlands, Poland, Spain and Sweden.
7 Either form ANRE (the Romanian Authority for Energy Regulation), or from other agencies, organisations or private
entities, such as ACER (the Agency for the Cooperation of Energy Regulators), CEER (Council of European Energy Regulators), CERRE (Centre on Regulation in Europe), A.T. Kearney, Berg Insight, BEUC (Bureau Européen des Unions de Consommateurs).
8 The Interpretative note on Directive 2009/72/EC concerning common rules for the internal market in electricity and
Directive 2009/73/EC concerning common rules for the internal market in natural gas — Retail markets, p. 7. Also, see Directive 2012/27/EC, Art. 2 (28), where the same definition is provided.
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In contrast to the classical meters, which could only monitor the electricity consumption and were manually read on a periodic basis (once a month or once every three months) by the employees of the electricity provider, smart meters have the capability of providing bi-directional transfer of information between the consumer and the supplier/operator, through GPRS or fibre optics. At the same time, they introduce novel features such as automatic consumption reading, collection of data with high frequency (nowadays even every 5 minutes), remote activation or deactivation of supply and even the
possibility to remotely control the final consumer’s electric appliances.9 There are 3 perspectives from which smart meters can be viewed, i.e. 1) the increased energy
awareness and savings standpoint, which entails they are devices that provide feedback and advice to the consumer, helping them adjust their behaviour; 2) the smart grid perspective, meaning they represent household data collectors for energy consumption, as well as a means of controlling some of the users’ appliances for optimum production-consumption management; and 3) the purely economic point of view, focusing on the smart meter as a medium of producing new tariff schemes for the
consumers, minimising fraud and reducing unpaid invoices.10
The smart meters measure the consumption of electricity for end-users, either for single households or entire buildings at very short time frames (each five minutes or up to one hour). This measurement is deemed appropriate for optimization of different operations, ranging from the determination of individual appliances’ actual consumption (through advanced processing) to providing insights into the state of the electricity grid. Thus, the characteristics of the smart meters provide tangible benefits both
for consumers and grid operators at a relatively reduced cost11.
Smart meters play an essential role in the EU’s endeavour of transitioning to an energy efficient society, as their analysis capacity surpasses the elementary function of consumption reading, making them a precise, reliable demand response tool and a key element of the Smart Grid.
The European Technology Platform on Smart Grids defined the Smart Grid concept, as follows, a definition which has also been adopted by the European Commission as well:
“A Smart Grid is an electricity network that can intelligently integrate the actions of all users connected to it - generators, consumers and those that do both – in order to efficiently deliver sustainable, economic and secure electricity supplies.”12 Amongst the most important features of the
9 G. Cervigni, P. Larouche, Centre on Regulation in Europe (CERRE), ‘Regulating Smart Metering in Europe:
Technological, Economic and Legal Challenges’, 31st March, 2014, 14.
10 F. Klopfert, G. Wallenborn, ‘Empowering Consumers Through Smart Metering’, Report for The European Consumer
Organisation (BEUC), 22 December 2011, 12.
11 Palacios-Garcia, E. J., Diaz, E. R., Anvari-Moghaddam, A., Savaghebi, M., Quintero, J. C. V., Guerrero, J. M.,
&Moreno-Munoz, A. (2017). ‘Using Smart Meters Data for Energy Management Operations and Power QualityMonitoring in a Microgrid’. In Proceedings of the 2017 IEEE 26th International Symposium on IndustrialElectronics (ISIE) IEEE Press. IEEE International Symposium on Industrial Electronics (ISIE), Vol.. 2017 <https://doi.org/10.1109/ISIE.2017.8001508>.
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smart grid, apart from engaging the most intelligent and innovative products and monitoring or communication, there are the means provided to consumers of playing an active part in the energy system, through access to better information and choice of supply.
Smart meters have the possibility to take the electricity products to the next level, as suppliers will be able to offer tailored tariff packages for customers based not only on their load profile, but also in terms of quality. For instance, some customers could accept interruption of electricity supply in case of emergencies of very high wholesale prices. Furthermore, consumers could receive price notifications from their electricity suppliers one day prior to the electricity supply so that the consumer could plan
his consumption the following day13.
Thus, the final consumer is not envisaged as a “weak market actor” who only needs social protection, but as a very strong market participant who brings its contribution to the markets’ performance, while
building, supporting and expanding the Single European Market.14
1.2 Implementation of the smart meters – How does it work?
Having explained the concept of “smart meters” takes the line of thought to the logical question of who is responsible with the actual implementation of the technical devices and the answer lies with the
Distribution System Operators.15 The Electricity Directive, in its Art.2(6) defines the notion of a
distribution system operator as being a natural or legal person responsible for operating, ensuring the maintenance of and, if necessary, developing the distribution system in a given area and, where applicable, its interconnections with other systems and for ensuring the long-term ability of the system
to meet reasonable demands for the distribution of electricity .16
DSOs are the stakeholders that have invested the most in smart grid projects, given the challenges the distribution segment faces when it comes to efficiency and reliability of the system, due to the fast
13 CERRE Smart Metering (2014). Also see S.G. Rodrigo, “Changing the Energy Model: Step Back on the Europe 2050
Strategy?” (2016) 25(2) European Energy and Environmental Law Review, 65, 66–67. Smart metering stimulates awareness and ultimately bring about efficient energy use and energy savings: S Pront-van Bommel, “A reasonable price for electricity” (2016) 39 Journal of Consumer Policy 141, 154.
14 K.J. Cseres, ‘The Active Energy Consumer in EU Law’, European Journal of Risk Regulation, 9 (2018), pp. 227–244,
doi:10.1017/err.2018.7.
15 DSOs, as they will be referred to throughout the paper.
16 And art. 2(5) of the same legislative act provides the definition of distribution as “the transport of electricity on
high-voltage, medium voltage and low-voltage distributions systems with a view to its delivery to customers, but does not include supply”
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changing environment of the industry (i.e. renewables, electric vehicles or the active demand-side
participation of the consumers).17
But, who bears the costs of the meters? One important factor to be highlighted is that although the DSOs need to undertake the investments for the smart meters roll-out, the actual cost of the smart meter is borne by the end consumers, as the DSOs recover their investments through the distribution tariff, which is part of the final electricity price.
In the majority of the EU countries, the ownership, installation and the related maintenance of the
meters are the responsibility of the DSOs, with a few exceptions.18.
Generally, besides the responsibility to install the meters, DSOs also have to ensure that data is transmitted properly at the consumption points and production sites and are under the obligation of setting up electric metering for balance settlement, billing and reading, verification, registration and reporting of the data to the market participants. Furthermore, another important obligation is the data security and protection which falls also under the responsibility of the DSOs. Nonetheless, the consumers and authorized third parties should be entitled to access the data recorded by the electricity meter. 19
In Romania, there are 8 Distribution System Operators that have borne the majority of the costs with smart meters deployment, being responsible with the installation, operation and maintenance of the meters, as in most of the other European countries and also to ensure that the functionalities of the smart meters are being implemented.
1.3 What are the ultimate functionalities of smart meters and how are they related to consumers? While the overall idea lying behind the introduction of smart meters is energy saving (framed in the general purpose of combating climate change) and raising consumers’ awareness regarding the possibility of consumption optimization, the European Commission has further produced a
Recommendation20 enunciating the main ten functionalities of smart meters, categorising them in
accordance with the stakeholders they address (i.e. the customer, the metering operators, the energy
17 Gangale F., Vasiljevska J., Covrig F., Mengolini A., Fulli G., Smart grid projects outlook 2017: facts, figures and trends
in Europe, EUR 28614 EN, doi:10.2760/701587, 39.
18 Exceptions include France, where the electricity meters are owned by the municipalities, however, the maintenance lies
with the DSOs. Another interesting exception is the United Kingdom where the smart meters are actually owned by the suppliers. In Denmark, DSOs own the electricity, gas and heat meters (in certain situations). See A.T. Kearney, ‘Smart Metering in Romania’, Final report, September 3rd, 2012, 29.
19 Finnish Energy Industries, 2010.
20 European Commission Recommendation 2012/148/EU. See also the European Smart Grids Task Force, Expert Group 1
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suppliers) or in view of the issues they might raise (i.e. security and data protection or distributed generation).
All of these functions converge towards the main scope of energy efficiency, sustainability and minimisation of the negative impact on the environment and last, but not least, the empowerment of the final consumers.
Thus, in the view of the Commission, each electricity smart meter should offer at least all the functionalities mentioned below:
For final consumers
a) Provide readings directly to the customer and any third party designated by the consumer. This is a highly important functional requirement as consumer feedback is critical for potential energy savings from a demand perspective. It has been agreed that if the consumers would be provided with accurate, user-friendly and timely readings through standardised interfaces that would enable them to make decisions in real time via home automation or various demand response schemes.
b) Update the direct readings frequently enough to allow the information to be used to achieve energy savings. In order for the information received to be considered reliable by the consumers, their actions should be reflected in the information received, hence an update rate of 15 minutes was recommended. Moreover, in order to enable the consumers to determine the cost of their consumption, the system should also be capable of storing consumption data for a reasonable period of time.
For the metering operator:
(c) Allow remote reading of meters by the operator, as a key functionality for the supply side.
(d) Provide two-way communication between the smart metering system and external networks for maintenance and control of the metering system.
(e) Allow readings to be taken frequently enough for the information to be used for network planning. For commercial aspects of energy supply:
(f) Support advanced tariff systems. According to this functionality, the smart meters should encompass time-of-use registers, advanced tariff structures, as well as remote tariff control that should contribute to energy efficiency and cost savings both for final consumers and for network operators by decreasing the peaks in energy demand. This functionality would be highly effective in empowering consumers, if coupled with the provision of the readings directly to the consumers (functionality a) on a highly frequent basis (functionality b) via the standardised interfaces aforementioned.
(g) Allow remote on/off control of the supply and/or flow or power limitation. One of the main advantages of this functionality is that it accelerates the process of connection and disconnection in cases of consumer house relocation. Furthermore, it represents an important aid when dealing with
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technical grid emergencies, although, on the other hand, it might introduce extra safety hazards that must be reduced to a minimum.
For security and data protection:
(h) Provide secure data communications. It must be underlined that for all communications between the meter and the operator a high level of security is crucial, including information transmitted through the meter to or from the appliances in the consumer’s home.
(i) Fraud prevention and detection. This feature is of great significance for the supply side of the smart meters, as it is essential not only for fraud prevention, but also to safeguard consumers from hacking access.
For distributed generation:
(j) Provide import/export and reactive metering.
In order to permit renewable and local micro-generation, the meters have to be “future-proofed”, thus this feature is recommended to be installed from the beginning, on a default basis, allowing the consumer to activate/disable it in conformity to their needs.
It is worth mentioning that these minimum functionalities have been supplemented by the Commission
with 33 other optional functionalities.21
The Commission itself states that the most difficult functionality to implement concerns the frequency of updating and providing access to consumption information for customers and third parties. This feature enables customers to receive direct feedback on expenses, to make informed decisions regarding their consumer habits, and to promote the creation of new retail services and products. When this function is unable to be provided by the intelligent metering scheme, the Member States should
guarantee that this feature can be added or otherwise met.22
The project team designated to conduct the A.T. Kearney report on smart meters feasibility in Romania identified a number of four additional functionalities from the supplementary list and other 8 functionalities that would be especially recommended for the country. They mainly related to fault identification in order to reduce outages, the management of power flows and voltages, identification of technical or non-technical losses, the possibility of fraud detection (by additionally monitoring the
21 European Commission Task Force for Smart Grids.
22 Report from the Commission ‘Benchmarking smart metering deployment in the EU-27 with a focus on electricity’,
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integrity breach sensor of the device), or the smart meters’ capacity of storage, expansion or remote
update, among others.23
Energy is part of the EU’s endeavour to create a functioning internal market, while preserving the environment and it is most important to note that the concepts of energy efficiency and energy saving
are even embedded in the Treaty on the Functioning of the EU, in art. 194 (1).24 This specific article
has been one of the legal bases for the energy efficiency-related secondary legislation adopted at EU
level, since the Lisbon Treaty came into force.25 In the following chapter, we will emphasize the
evolution of the legislation regarding smart meters. 2. Legislation – the EU and Romania
2.1 The evolution of smart meters in the EU’s regulation and policy
The idea of smart meters started to develop ever since Energy Service Directive 2006/32/EC mentioned that end customers have to be provided with competitively priced individual meters that
accurately reflect consumption and provide information on the actual time of use.26
Later on, in order to acknowledge that smart metering represents a key step in empowering consumers to make informed choices, the EU legislator introduced in the Electricity Directive 2009/72/EC
provisions promoting the smart metering roll-out by 2020.27 The focus would be on the active
participation of consumers on the market of energy supply by means of i) metering transparency (i.e. precise and time-sensitive consumption information in order to determine predictability of costs and increase awareness), ii) facilitating data access and interoperability for third parties to promote competitive offers for the consumers, at lower costs, iii) appropriate consideration for best practices (e.g. in-home display installation or self-consumption).
23 A.T. Kearney, Smart Metering in Romania, Final report, September 3rd, 2012, 56. 24 K. Talus, (n 1) 2. Also, art. 194 (1) TFEU reads:
‘1. In the context of the establishment and functioning of the internal market and with regard for the need to preserve and improve the environment, Union policy on energy shall aim, in a spirit of solidarity between Member States, to: a) ensure the functioning of the energy market; b) ensure security of energy supply in the Union; c) promote energy efficiency and energy saving and the development of new and renewable forms of energy; and d) promote the interconnection of energy networks.’
25 Such as Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the
use of energy from renewable sources or Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency.
26 Art. 13(1) of Directive 2006/32/EC.
27 Electricity Directive, Directive 2009/72/EC of 13 July 2009, [2009] OJ L 211/55, part of the Third Energy Package. See
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In a wider perspective, the Third Energy Package also supported the global objectives encompassed by
the EU’s 2020 Policy (the Lisbon Strategy) regarding smart and sustainable development.28
These legislative acts were then followed by the adoption of the Energy Performance in Buildings
Directive 2010/31/EU,29 and the Energy Efficiency Directive 2012/27/EU that added demand response
as a specific tool for delivering energy efficiency benefits through new, smart metering-based energy
services, while showing deference to the protection of personal data and consumer protection.30
Although the Third Energy Package supported the idea of energy consumers’ active participation, it did not provide them with the means to actually engage in the energy market.
These have been introduced by the Clean Energy for all Europeans package31, which came into force
in July 2019, especially by Directive (EU) 2019/944 regarding the internal market for electricity. The “facilitative rules” range from dynamic price contracts and demand response to comparison tools. There is an entire chapter dedicated to consumers entitled “Consumer empowerment and protection” addressing the freedom to change suppliers, basic contractual rights, dynamic price contracts, access to
certified price comparison tools.32
The Directive specifically states that “Consumers should have the possibility of participating in all forms of demand response. They should therefore have the possibility of benefiting from the full deployment of smart metering systems and, where such deployment has been negatively assessed, of choosing to have a smart metering system and a dynamic electricity price contract. This should allow them to adjust their consumption according to real-time price signals that reflect the value and cost of
electricity or transportation in different time periods,”33
28 Setting a target of providing at least 80% of the consumers with smart meters by 2020. See The Commission Staff
Working Document Evaluation Report covering the Evaluation of the EU's regulatory framework for electricity market design and consumer protection in the fields of electricity and gas, Brussels, 30.11.2016 SWD(2016) 412 final.
29 Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the energy performance of
buildings, amended by Directive (EU) 2018/844 of 30 May 2018. See Art. 8 (2) of the former, stipulating that ‘Member States shall encourage the introduction of intelligent metering systems whenever a building is constructed or undergoes major renovation, whilst ensuring that this encouragement is in line with point 2 of Annex I to Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity. Member States may furthermore encourage, where appropriate, the installation of active control systems such as automation, control and monitoring systems that aim to save energy.’
30 In accordance with Art. 8 and Art. 38 of the Charter of Fundamental Rights of the European Union.
31 Comprising of 8 legislative acts on renewable energy - Directive (EU) 2018/2001, energy efficiency - Directive
2018/2002, energy performance of buildings - Directive 2018/844, governance of the energy union and climate action - Regulation 2018/1999, establishment of a EU Agency for the Cooperation of Energy Regulators - Regulation (EU) 2019/942, internal market for electricity - Regulation (EU) 2019/943 and Directive (EU) 2019/944 and last but not least, risk-preparedness in the electricity sector - Regulation (EU) 2019/941.
32 K.J. Cseres, ‘The Active Energy Consumer in EU Law’, 240-241.
33 Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal
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It is very important to underline that the issue of smart meters is expressly and extensively approached, from the consumers’ entitlement to a smart meter to accurate billing information and dynamic electricity price contracts based on the data provided by the smart meters.
One of the most striking provisions of the recast Electricity Directive is entailed in Annex II of the document, entitled Smart Metering Systems, and states that where the smart meters deployment was assessed positively, “at least 80 % of final customers shall be equipped with smart meters either within seven years of the date of the positive assessment or by 2024 for those Member States that have initiated the systematic deployment of smart metering systems before 4 July 2019.” This proves that even the EU has in fact postponed its 2020 plans for the smart meter roll-out until 2024, which means that the previous target might have been a slightly unrealistic goal.
In order to be able to implement its overall transition policy, the EU had to put in place a vast body of legislation that would target energy efficiency, energy obtained from different renewable resources and even the role that the consumers are going to have in the newly reformed energy markets. It is important to note that in order for the policy to be implemented every Member State has to be committed to achieving the EU goal in order for it to materialise.
2.2 An overview of the smart meters legislation in Romania
With respect to its primary legislation (i.e. laws), the regulation of smart meters deployment in Romania starts with Law no. 123/2012 regarding electric energy and natural gas with its subsequent amendments which transposed the provisions of Directive 2009/72/CE into the national legal order. Its original provisions stipulated the national regulator would evaluate the benefits and feasibility of smart meters and also established a target of 80% for the implementation of smart meters, by 2020.
The next addition to the legal framework was Law no. 121/201434 regarding energy efficiency, which
partially confirmed the provisions of its predecessor and focused more on the consumers, introducing their right to a detailed information regarding consumption, as well as the issue of privacy and the possibility for the smart meters to also measure the energy exported by the consumer to the grid. These can be regarded as first steps towards facilitating consumers’ active participation to the energy market as prosumers.
These main legislative documents were subsequently amended. For example, in July 2018, the legislator adopted Law no. 167/2018 for the amendment and completion of Law no. 123/2012. One of
the most striking modifications is stipulated in point 5 and refers to the alteration of Art. 6635 of the
34 Art. 10 et seq. of the Law no. 121/2014 regarding energy efficiency. 35 The article is entitled ‘Smart metering systems’.
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above-mentioned law, in the sense that based on DSOs smart metering implementation projects, ANRE will approve an implementation calendar so that a) final consumers who own production
sources with a power lower than 10 kW have smart meters installed by 1st of January 2024 and b) the
other final consumers should benefit from smart metering systems installation by 31st December 2028.
Regarding the Clean Energy Package abovementioned, it seems that Romania has actually extended the 2024 deadline stipulated in Annex 2 of the recast Electricity Directive with 4 years.
There have been a number of Orders issued by the National regulator in the field of smart meters
(labelled as secondary legislation), starting with Order 91/201336 on the base of Law number
123/201237, regarding the implementation of electricity smart metering systems which defined smart
meters and stipulated their functionalities (mandatory and optional), while reconfirming an implementation target of approximately 80% for the final consumers, by 2020.
The next piece of legislation issued by the national regulator is Order of ANRE no. 145/2014 regarding the implementation of electricity smart metering systems, which has been amended several times in the following years, by orders issued by the same regulator. These orders have mainly
approved either the smart meters roll-out plans and pilot projects (until 2017),38 or have established the
maximum limit for the investments regarding smart meters installation, which for 2017 and 2018 could
not be higher than 10% of the DSO’s total annual investment plan.39
Another document addressing the issue of smart meters is the Metering Code40 from 2015, which
emphasized the technical conditions the metering system should fulfil, while acknowledging the
well-deserved place intelligent meters have, as the fundament of the Smart Grid idea41.
The national regulator’s most recent decision42 refers to the smart meters implementation calendar for
the period between 2019 and 2019 and establishes in a detailed manner how the roll-out is supposed to take place each year for each of the 8 DSOs, with a rate of implementation of up to 70% in some cases, by 2028.
36 Order no. 91/2013 available in Romanian at
<https://www.anre.ro/download.php?f=gKp%2BhQ%3D%3D&t=vdeyut7dlcecrLbbvbY%3D>.
37 Art. 66 of Law no. 123/2012.
38 Such as Orders no. 119/2015, 6/2016, 17/2017, 31/2017, available in Romanian at
<https://www.anre.ro/ro/energie-electrica/legislatie/smart-metering>.
39 Order no. 25/2018, available in Romanian at <https://www.anre.ro/ro/energie-electrica/legislatie/smart-metering>. 40 Romanian metering code, Order of ANRE no.103/2015, Chapter 3, Section 3, Art. 31 et seq.
41 D. Stanescu, D. Federenciuc, M. Albu, S. Gheorghe, D. Ilisiu, C. Stanescu, ‘Performance standards applied to Romanian
TSO and DSO’, 24th International Conference & Exhibition on Electricity Distribution (CIRED) 12-15 June 2017, Open
Access Proc. J., 2017, Vol. 2017, Iss. 1, 796–799.
42 Decision no. 778/2019 on the approval of the smart meter roll-out calendar at national level for the 2019-2028 period,
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3. Reports on smart meters’ roll-out in Romania and in other EU countries 3.1 Evolution of the actual roll-out in Romania
In 2012, the European Bank for Reconstruction and Development (EBRD) requested A.T. Kearney43
to conduct the feasibility study of the smart metering introduction on the Romanian heat, gas and electricity markets, including the cost-benefit analysis emphasizing the possible economic impact of the deployment for the key stakeholders. One of the main stakeholders in this endeavour was ANRE, the national regulator, which was continuously informed about the progress and has itself provided information regarding aggregated data about the markets at issue.
Other stakeholders, such as the utility companies and technology providers (i.e. equipment suppliers) were also involved in the study, as they had to either state their expectations and concerns regarding smart meters (in the case of the former), or their price offer and availability (in the case of the latter). The main conclusion of the study was that, according to the cost-benefit analysis, the implementation of smart metering in the electricity sector would have “the potential to be a profitable investment.” However, it is important to underline that this would have been the case only if the implementation rate recommended by the European Commission was respected, i.e. a coverage of 80% of the low-voltage customers (households, small and medium commercial customers) by 2020, with a full
coverage by 2022 and that a deviation from the plan could “severely impact the business cases”.44
According to ANRE45, the Romanian DSOs started the implementation of a certain type of smart
meters even before 2012.46 Following the positive result of the 2012 feasibility study drafted by AT
Kearney, according to ANRE47, in 2015 the regulator approved a number of 18 pilot projects48 which
targeted rural and urban areas with upgraded electricity grids.
43 A.T. Kearney is a renowned American global management consulting firm. It has been appointed to conduct similar
analyses regarding smart meters across Europe.
44 A.T. Kearney, ‘Smart Metering in Romania’, Final report, September 3rd, 2012, 11,75, 81.
45 ANRE 2018 Report on the smart meter implementation results realised in accordance with the ANRE Order 145/2014,
page 4, available in Romanian at <https://www.anre.ro/ro/energie-electrica/informatii-de-interes-public/info-sisteme-de-masurare-inteligenta>.
46 For instance, one of the DSOs started pilot projects at the level of each county, installing meters that partially fulfilled the
requirements of the smart meters in the sense we know today and, as of 2012, there were already a number of 208,857 consumers using smart meters, out of which 175,714 were connected to the low voltage network (retail consumers). Those smart meters will not be replaced until the end of the normal usage life.
47 ANRE 2018 Report on the smart meter implementation results realised in accordance with the ANRE Order 145/2014, 5,
6, available in Romanian at <https://www.anre.ro/ro/energie-electrica/informatii-de-interes-public/info-sisteme-de-masurare-inteligenta>.
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Based on the results of the first pilot projects, the national regulator decided that also in 2016, the roll-out of smart meters should not be expanded to a full nation-wide roll-roll-out, but rather remain at a testing stage. However, the pilot projects were expanded to distribution networks (in both rural and urban areas) that had not been upgraded. ANRE considered that a 6-month monitoring period was necessary for the pilot projects in order to derive the necessary conclusions that would form the basis for the full, nation-wide, smart meter roll-out. Furthermore, ANRE noted that the DSOs needed to conduct the cost-benefit analyses through third-party consultants to ensure comparability and at the same time to avoid lack of objectivity.
In order to deal appropriately with the above mentioned issues, ANRE approved, on 26th Feb 2016, the
Order no. 6/2016 for the amendment of the ANRE Order no. 145/2014 on the smart meter implementation which included the points mentioned earlier (e.g. monitoring of projects, expansion of pilot projects to non-technologically advanced areas) and, in addition, amended the deadline for the
development of the nation-wide roll-out plan and the relevant implementation schedule.49
In 2016, 22 pilot projects were further approved by ANRE with a total value similar to the 2015 level50
for 5 out of the 8 DSOs present in Romania. The other DSOs who decided not to pursue any investments in smart meters pilots in 2016 are also the ones that have recorded the highest unitary costs for the installation of the smart meters, as ANRE mentions in their 2018 Report on the smart
meter implementation results51.
The main aspects that have been uncovered in the monitoring process of the pilot projects emphasize lowered installing costs, unattained forecasted benefits and a lack of proper information of the
consumers regarding smart meters.52
In terms of the benefits realized by the DSOs, following the 2015 and 2016 pilot projects, ANRE53
highlights the following:
a) Reduction of the commercial grid losses by approx. 45% (in 2015) and by 49% (in 2016), for the
DSOs. Commercial grid losses are defined54 as the loss in electricity due to incorrect meter readings,
meter consumption recording failures or human errors. The actual percentages witnessed by the DSOs
49 ANRE’s 2016 National Report, July 31st 2017, 10, 11, available at <www.anre.ro>. 50 i.e. approx. €15m.
51 ANRE 2018 Report on the smart meter implementation results realised in accordance with the ANRE Order 145/2014
available in Romanian at <https://www.anre.ro/ro/energie-electrica/informatii-de-interes-public/info-sisteme-de-masurare-inteligenta>. Indeed, in 2015, four of the eight operators recorded unitary costs of over €150 with the installation of the smart meters (approx. 50% above the €99 level mentioned in the A.T. Kearney feasibility report). Three of the four operators have not pursued any roll-outs in 2016 and 2017, while one of them continued the pilot programs in 2016, but stopped in 2017.
52 ANRE’s 2016 National Report, July 31st 2017, 191, 192, available at <www.anre.ro>.
53 ANRE 2018 Report on the smart meter implementation results realised in accordance with the ANRE Order 145/2014,
9-13, available in Romanian at <https://www.anre.ro/ro/energie-electrica/informatii-de-interes-public/info-sisteme-de-masurare-inteligenta>.
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vary and can be as low as approx. 3% for some operators and as high as approx. 90% for other operators.
b) Reduction of technical grid losses for the DSOs by approx. 5% (in 2015) and by approx. 4% (in
2016), on average. The technical grid losses are defined55 as the losses caused by the transportation of
electricity from one network to another or within the same network. c) Reduction of the costs with reading the meters by up to 100%.
d) Costs with decoupling/reconnecting the consumers from the grid have dropped by up to 93% (in 2015 and 2016) for certain DSOs as the operation can now be executed remotely via the smart meter. e) The numbers of complaints received from customers have, on average, decreased. Nonetheless, there are operators for which the actual number has increased mainly to the increase in electricity consumption following the installation of the smart meter.
Following the results of the pilot projects conducted in 2015 and 2016 and most likely, in conjunction with the precarious state of the electricity grid and the obligation to ensure the safety of operation, ANRE, decided to limit the investments in smart meters for the years 2017 and 2018 to a maximum of
10% of the annual investment programmes of the DSOs.56
Overall, for the 2015-2017 period, the implementation of smart meters in Romania had only reached a
level of 4.8%57. ANRE has not yet published the report including the 2018 investments in smart meter
and the latest penetration levels.
In Feb 2019, ANRE issued a press release mentioning the total value of the investments to be realized by the DSOs during the current year (approx. €336m) with the value of investments allocated to smart meters of approx. € 16m, which translates into 5-6% of the total investment plan (well below the maximum threshold of 10% imposed by the regulator).
According to the same press release, the regulator confirms that 90% of the investments will target the upgrade of the network, reduction of the grid losses, improvement of the quality parameters of the service and the extension of the grid.
The regulator indicates that starting 2018, the control over the way the DSOs conduct their investments has been tightened, underlining that in case the DSOs fail to complete the investment plan in a proportion of 95% of the approved levels, the operators risk being imposed a fine that can vary
between 5% and 10% of the DSO’s annual turnover. 58 This is one of the factors that incentivise the
DSOs to complete their investment plan which includes the smart meters roll-out.
55 Technical Norm NTE 013/16/00 issued by ANRE.
56 Order no. 25/2018 amending ANRE order no. 145/2014 regarding the roll-out of electricity smart meters.
57 ANRE 2018 Report on the smart meter implementation results realised in accordance with the ANRE Order no.
145/2014, 10, available in Romanian at < https://www.anre.ro/ro/energie-electrica/informatii-de-interes-public/info-sisteme-de-masurare-inteligenta>.
58 The press release is available in Romanian at
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Later on, in May 2019, ANRE issued a decision59 which approves the calendar for the national roll-out
of the smart meters. The calendar shows that Romania will not achieve the EU imposed targets for
2020, not even in 2028.60
Next, there will be an emphasis of the smart meters deployment in other EU countries and a determination of Romania’s position compared to them.
3.2 Where is Romania situated compared to other Member States?
According to ACER/CEER61, in 2017, two more countries (Estonia and Spain) finalized the smart
meter implementation. By 2018, ACER/CEER report that most consumers in Norway shall have smart meters installed, followed by Luxembourg and the Netherlands (by 2019). At of the end of 2017, in 9 countries the smart meter implementation has been conducted to more than 50% of the household consumers. The same report mentions that in 7 countries the level of implementation is not material (i.e. below 50%). Romania is also included in this group of countries in view of its 4.8% penetration rate by the end of 2017. In some countries (e.g. Germany, Czech Republic, Croatia, Greece, Ireland) no smart meters have been introduced.
According to a market research conducted by Berg Insight,62 smart metering has already reached a
maturity stage with significant roll-outs in large areas of Western Europe, while in Central and Eastern Europe, the overall implementation trends are different from country to country. At the end of 2018, the penetration rate in the EU28+2 was approx. 44% (i.e. approx. 124 million of electricity consumers) with the rate estimated to reach 71% by 2023. The large part of the new smart meter roll-out will occur in France and the UK, while other important markets are Austria and the Netherlands. Italy and
Sweden were the first European countries to initiate smart meters roll-outs. 63
The subsequent country by country analysis is largely based on the Smart Metering reports provided by Berg Insight.
59 Decision no. 778/2019 on the approval of the smart meter roll-out calendar at national level for the period 2019-2028,
available in Romanian at <https://www.anre.ro/ro/energie-electrica/legislatie/smart-metering>.
60 Four of the eight operators are estimated to achieve penetration levels between 1% and 3% in 2019, while the other four
will reach penetration levels between 15% and 20%. The lag between the various operators will be maintained until 2028 with certain operators achieving penetration levels between 33% and 45%, while other will have much higher penetration rates (between 60% and 70%.)
61 Annual Report on the Results of Monitoring the Internal Electricity and Natural Gas Markets in 2017; available in
English at
<https://www.acer.europa.eu/Official_documents/Acts_of_the_Agency/Publication/MMR%202017%20-%20CONSUMER%20PROTECTION.pdf>.
62 Berg Insight is a dedicated M2M/IoT market research firm based in Sweden.
63 Berg Insight, ‘Smart Metering in Europe’, 13th and 14th editions and newspaper article published in the Smart Energy
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Italy began the large scale implementation between 2001 and 2006 with the original design (from the early 2000s) already becoming out-dated and the equipment reaching their technical lifespan. Hence, Italy is preparing to roll-out a second wave of smart meters.
Sweden has a relatively more difficult situation with regulatory uncertainty. As in the case of Italy, Sweden has completed the first wave roll-out in 2009 and the devices will need to be replaced by the early 2020s. The largest DSOs in the country, E.ON, Ellevio and Vattenfall are still in the planning phases for the second wave roll-outs. It is estimated that approx. 5 million new generation smart meters will be rolled out in Sweden by 2025.
Denmark and Finland also have a relatively high share of first generation smart meters, while Norway is estimated to have completed its roll-out only at the end of 2018.
Germany’s approach towards smart meters is rather conservative as the country is working on a transition period of up to 20 years during which smart meters will be installed only for certain groups of consumers. In July 2016, the new regulatory framework and implementation roadmap was formally approved. By 2025/2028, only 10% of the consumers will need to install smart meters while for 90% of them the meters will be optional.
Spain: The National Commission on Markets and Competition (“CNMC”), the regulator of, among others, the electricity and gas markets in Spain, mentions in the 2018 report to the European
Commission64 that by the end of December 2017, 91% of the new meters have already been installed
for the Spanish residential customers (up to 15 kW contracted power). The decision to start the replacement of the classic electricity meters was taken in 2008 with a 10-year roll-out period.
In June 2015, Spain adopted the procedures to initiate the invoicing of customers equipped with smart meters based on hourly consumption and hourly prices with the first invoices being issued in October 2015.
CNMC notes that one of the benefits of the roll-out and the subsequent hourly invoicing is that the consumers can actively participate in the electricity market by delaying the consumption to the hours when the price of electricity is not that high.
Spain is perceived in the European Union as one of the role models in terms of smart metering roll-out.
64 Spanish Energy Regulator’s National Report to the European Commission 2018, available in English at
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In Denmark, the Danish Energy Regulatory Authority (“DERA”) transferred all tasks to the Danish
Utility Regulator that was established on July 1st 2018. DERA notes in their 2017 national report65 that
the deployment of smart meters is progressing at an advanced rate. The Danish Parliament has passed legislation that requires the roll-out of smart meters with the functionality of hourly reading for all consumers by 2020. A large part of the grid companies operating in Denmark have installed smart meters for over half of Denmark’s households (more than 75% of the recorded consumption).
DERA also notes in their report that all parties involved should theoretically benefit from the roll-out of smart meters. For instance, consumers can track their consumption and save money by reducing their electricity usage at peak hours, while grid operators should be able to provide a swifter response to problems arising in the network. At the same, grid operators can better plan their investments as a result of an enhanced understanding of the electricity load dynamics. From December 2017, suppliers are able to use hourly meter readings when invoicing customers with an annual electricity consumption below 100,000 kWh. Prior to this moment, this was only possible for clients with consumption above the 100,000 kWh thresholds.
In Central and Eastern Europe, the implementation dynamics differ significantly per country. Estonia was the first country to reach a full roll-out at the end of 2016, while Latvia is executing a partial implementation for larger consumers. Lithuania has only recently launched a pilot.
While in Poland, the technical norms have not yet been agreed and only one of the DSOs will undergo a full roll-out, the others are still working on pilot projects, in the Czech Republic, the implementation of the smart meters has not been found to add value as compared to the costs, hence, no roll-out will take place. Slovakia’s feasibility study yielded a positive result only for a partial roll-out and will install smart meters to approx. 30% of the consumers (or approx. 50% of the consumption) by 2020, while Hungary set up a new entity owned by the TSO to manage a nation-wide pilot over the next years. In Bulgaria, currently, there are no proposals for a mandatory implementation, whereas Greece is planning a large-scale pilot.
4. Why is the roll-out of smart meters not taking off in Romania? 4.1 The national regulation problem
National energy market authorities were created through the provisions of Directive 2003/55/EU (the Second Energy Package) which stipulated that all the decisions regarding the important matters for the functioning of the electricity and gas markets were going to be made by the energy regulator. In its
65 Denmark National report 2017 (status for 2016), available in English at
<http://forsyningstilsynet.dk/fileadmin/Filer/Information/Diverse_publikationer_og_artikler/National_Report_2017_DERA .pdf>.
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activity this entity has to be independent from both private players and the government, according to the Third Energy Package. One of the most important competences of the national energy market regulator is to fix or approve either the transmission and distribution tariffs, or the methodologies
standing behind their determination.66
Although the regulatory environment may not be the primary incentive for the smart metering deployment in some of the European countries, such as Denmark or Sweden, where companies took
the initiative of investing in smart meters without their governments’ insistence,67 in the majority of
the cases regulation plays the most important role, as the national pledged targets have to be achieved. As stated before, according to the European Commission, in 15 out of the 16 Member States that have decided to implement a large-scale, nation-wide roll-out of the smart meters, the responsibility to install the smart meters lies with the DSOs. Hence, the investments in smart meters will be recovered
through network distribution tariffs68.
The most important issues that arise with smart grid deployment are generally: i) the high costs, ii) the lack of incentives and iii) the insufficient regulatory policies. Hence, the regulatory framework under which the DSOs operate is highly important for the deployment of smart meters.
The regulator needs to initiate discussions, involve all relevant stakeholders and ensure the necessary incentives for DSOs to invest in smart grid projects. Generally, these projects have a higher risk than traditional network investments as the benefits are not always easily quantifiable. Most of the Central and Eastern European countries do not include any special incentives for DSOs to undertake smart grid investments, but Romania and Slovenia are two of the countries that include a smart grid component.
In Romania, the DSOs receive a 0.5% extra Weighted Average Cost of Capital (“WACC”)69 as
compared to other investments. The system is in line with the Italian regulatory system where the extra WACC is 2% for certain smart grid investments. In Slovenia, the DSOs are granted a one-time incentive of 2% of the investment value for smart grid projects that is added to the regular income
granted for the conducting the grid operations70.
As stated before, DSOs are the stakeholders responsible for the installation and maintenance of the smart meters. However, it is the final consumer that bares the cost of acquisition and installation, not
66 K. Talus, ‘Introduction to EU Energy Law’, Oxford University Press 2016, 48. 67A.T. Kearney, ‘Smart Metering in Romania’, Final report, September 3rd, 2012, 24.
68 Report from the Commission Benchmarking smart metering deployment in the EU-27 with a focus on electricity,
COM/2014/0356 final.
69 The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security
holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital.
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beforehand, but gradually, as this is incorporated in their energy bill. A more detailed explanation on how the Romanian DSOs recover their investments in smart meters is described below.
According to the Romanian regulator’s methodology for setting the electricity distribution tariffs71, the
investment programme that is proposed by a DSO in Romania needs to be approved by the national regulator, ANRE. The investment programme is divided into 3 main categories: i) essential investments, ii) necessary investments and iii) justifiable investments.
The first category includes investments which are aimed at ensuring the safe operation of the distribution network and the continuity of power supply (e.g. upgrade of existing transformation lines which are overloaded, replacement of the equipment that is physically and morally depleted).
The second category, necessary investments, targets the upgrade and the increase in efficiency of the distribution network to ensure operation at the imposed quality standards. These include, in the order mentioned by the regulator: a) replacement of existing equipment that have been amortized and do not respect the standards imposed by the current regulations, b) replacement of equipment and upgrades aimed at reducing energy losses, c) improving the quality of the electricity distribution service (e.g. works aimed at increasing the voltage level), d) expansion of the existing network to supply new users, e) roll-out of smart metering programmes and of other programmes aimed at improving cyber-security, f) new connections to the grid.
The third and last category, justifiable investments, is dedicated to, among others, acquisition of equipment to improve work safety conditions (e.g. kits and tools) or refurbishment of administrative buildings.
Thus, it is worth noting that by qualifying the installation of smart meters as just necessary, but not essential, the national regulator implies the fact that smart metering installation does not represent a top priority for the Romanian electricity market.
In addition, although the list of necessary investments is not deemed to be complete by ANRE, the order of the smart metering roll-out is relevant (no. 5 out of the 6 listed necessary investments) in determining the importance/emphasis placed by the regulator for the smart meter roll-out.
The investments approved by ANRE are included in the total regulated income of the DSO which is further used to determine the electricity distribution tariffs relevant for the specific DSO in a given year. Hence, all the investments pursued by the DSO and recognized by ANRE will be recovered through the distribution tariff charged to the end consumer in the final electricity bill. The electricity distribution tariff is only one of the components that form the final electricity bill. Generally, the final energy price is the sum of three main components, i.e. the energy and supply component, the network
71 Order no. 169/2018 regarding the approval of the Methodology for determining the tariffs for the electricity distribution
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component, consisting of transmission and distribution tariffs and the component comprising taxes,
levies fees and charges.72
If the DSO decides to pursue other investments, not recognized by the regulator, these will not be included by the regulator in the distribution tariff and will impact the overall profitability of the company. Hence, there are no incentives for a DSO to pursue investments outside of the approved regulatory framework.
In theory, the DSOs could attract the necessary funding in order to accelerate the smart meter roll-out and fulfil its targets, but for this to happen, ANRE would need to neglect all the essential investments, prioritize the smart meter roll-out and approve an increased level of investments in smart meters, which would then lead to a high and swift increase in the electricity distribution tariffs impacting the final consumer through the final electricity bill.
But according to the same methodology drafted by ANRE, the distribution tariffs cannot increase by more than 10% in a given year (in real terms) for each of the distribution tariffs (i.e. High-Voltage, Medium-Voltage, Low-Voltage) and by more than 7% for the average weighted tariff, meaning this is another mechanism included by the Romanian regulator to minimise the impact for the end consumer. There are several reasons why ANRE has chosen another path for the implementation of the smart meters, i.e. a progressive, long-term roll-out (reaching up to 70% penetration level by 2028) of the smart meters with caps imposed to the levels of investments dedicated to smart meters (i.e. 10%).
First of all, the state of the electricity grid in Romania is not matching the level of the more developed countries in the European Union, since the majority of the electricity distribution network equipment is
out-dated and needs substantial investments for maintenance and upgrades.73
The DSO concludes in their 2018 Annual Report that their investments have been mainly directed to replace the old equipment, to ensure necessary safety in operating the grid and to a certain extent to increase the efficiency of the operations.
72 They are all described in Regulation (EU) 2016/1952 of the European Parliament and of the Council of 26 October 2016
on European statistics on natural gas and electricity prices and repealing Directive 2008/92/EC (OJ L 311, 17.11.2016,p.1), Annex II, point 5 (a). Also, see the Directive of the European Parliament and of the Council on Common rules for the internal market for Electricity and amending Directive 2012/24/EU (recast), of 5 June 2019.
73For instance, Electrica S.A., the company which owns 3 out the 8 DSOs in Romania (i.e. SDEE Transilvania Nord, SDEE
Transilvania Sud, SDEE Muntenia Nord), mentions in their 2018 Annual Report73 that approx. 70% of the electricity
installations in their grid have been developed between 1960 and 1990 and have a high degree of wear and tear. Only 30% of their equipment has been installed after 1990 and is still in line with the current standards/norms in the industry. Furthermore, they note that the equipment installed between 1980 and 1990 (approx. 10%) is gradually surpassing the normal usage period. See Electrica S.A.’s 2018 Annual Report available at https://www.electrica.ro/wpcontent/uploads/2019/04/ELSA_EN_ANNUAL-REPORT_Web_2018.pdf.
