Announcement

2024 will be a transition year to the 5^th Regulatory Period for the distribution system operators, following ANRE Order 79/2023

Electrica announces the investors and shareholders that ANRE Order no. 79/2023 (Order) regarding the modification and completion of the Methodology for establishing tariffs for the electricity distribution service, approved by ANRE Order no. 169/2018, was published in the Romanian Official Gazette no. 618/6 July 2023.

The changes brought by this Order together with the application rules in its annex refer mainly to the fact that the year 2024 will represent a transition period from the fourth regulatory period (RP4) to the fifth regulatory period (RP5).

Among the main changes to the methodology for setting the tariffs for the electricity distribution service we mention the following:

•     The target income for the year 2024 is established according to the provisions of Annex no. 1^1 to the Order;

•     The regulated income for the distribution service related to the year 2024 is equal to the target income to which the annual corrections of the year 2022 are added algebraically;

•     The inflation rate used to calculate the 2024 tariffs is equal to the one forecast by the National Forecasting Commission for the year 2024;

•     The correction related to the inflation from the end of RP4  will be calculated in 2024 and added to the target income of 2025;

•     The RAB value achieved on 31 December 2023 is calculated in 2024. The distribution system operators must submit\ by 31 May 2024 to ANRE the net accounting value of the fixed assets included in the RAB as at 31 December 2023;

•     Until 15 August 2023, the distribution operators will submit to ANRE both the tariff requests as well as the investment programs related to the year 2024;

•     There are some specific regulations for the Distribution System Operators (DSOs) from the Electrica Group that merged in the fourth regulatory period, among which the most important are:

o  The distribution tariffs remain distinct for each network area, but are established based on a single regulated revenue at the DEER level, approved for the year 2024;

o  for the year 2024, a single regulated NL* target is established for each voltage level.

Regarding the methodological rules in Annex no. 1^1 to the Order, regarding the establishment of the target income for the year 2024, we mention the following aspects:

•     The regulated NL targets for the year 2024 are established using the annual reduction percentage of the regulated NL targets considered for the year 2023 compared to the year 2022, applied to the regulated targets related to the year 2023;

•     The forecast reference price for the purchase of electricity for covering the 2024 regulated NL (the same for all the distribution system operators) is calculated as a weighted average considering 75% of the price approved by MACEE** and 25% the weighted average price registered on DAM*** for May 2023.

•     For the year 2024, the RRR is maintained at the value approved by ANRE Order no. 75/2020, respectively 6.39%;

* NL = Network Losses

** MACEE = Mechanism for the centralized purchase of electricity, approved by the Government's Emergency Ordinance no. 153/2022 for the amendment and completion of the Government Emergency Ordinance no. 27/2022 regarding the measures applicable to final customers in the electricity and natural gas market in the period 1 April 2022 - 31 March 2023, as well as for the amendment and completion of some normative acts in the field of energy and the amendment of the Government's Emergency Ordinance no. 119/2022 for the amendment and completion of the Government Emergency Ordinance no. 27/2022 regarding the measures applicable to end customers in the electricity and natural gas market in the period 1 April 2022 - 31 March 2023, as well as for the modification and completion of some normative acts in the field of energy

*** DAM = Day Ahead Market (from OPCOM - Romanian Electricity and Gas Market Operator)

**** RRR = Regulated Rate of Return

Contact details:

Electrica Investor Relations

E-mail: [email protected]

Telefon: +40 731 796 111

Chief Distribution Officer

Livioara Sujdea