Market Competitive Intensity: Romania

Table of Contents

• CATALYST
• SUMMARY
• ANALYSIS
  • Introduction: MCI Index offers a robust framework for measuring the development of energy Market Competitive Intensity
    • The MCI Index shows how attractive a particular market is to new entrants in terms of the competitive environment
    • The MCI assessment draws on nine underlying metrics grouped into three broad clusters: Market framework; Supplier Push; Customer Pull.
    • The MCI Index measures the development of 20 diverse European gas and power markets
    • The MCI Index assesses markets in December 2006 and on 1st July 2008 in addition to driving a market switching forecast
    • Each of the nine pillars has an assessment scale to allow for the comparison of diverse markets (see appendix for more details)
    • Two differing overall MCI scores are calculated to ensure full clarity of results
      • A simple weighted average (additive) measure shows overall competitive intensity
      • A weighted multiple (multiplicative) measure shows overall competitive intensity
    • The MCI framework has a number of applications for your organization
  • Context: Romania' s gas and power scores lead the other less developed Central and Eastern European economies
    • Romania' s score is above those seen in other, more developed, economies
    • Like the power market, Romania' s gas market achieves a higher score that other more developed economies in the region
  • Power MCI: Weak Customer Pull metrics curtail the overall power score
    • Romania' s Market Framework metrics are driven by the existence of the wholesale market and an efficient TPA regime
      • Effectiveness of Regulator [2006: 4/10 2008: 4.5/10]
      • Ease of Third Party Access [2006: 8/10 2008: 8/10]
      • Effectiveness of Balancing and Data Transfer [2006: 10/10 2008: 10/10]
    • Romania' s Supplier Push metrics are driven by fragmentation in the generation market and the existence of the OPCOM market
      • Wholesale Market Fragmentation [2006: 7/10 2008: 7.5/10]
      • Retail Market Fragmentation [2006: 2/10 2008: 4/10]
      • Traded Market Maturity [2006: 6/10 2008: 7.5/10]
    • Customer Pull metrics are likely to remain modest, despite full market opening in 2007
      • Access to Market Information and Assistance [2006: 2/10 2008: 2.5/10]
      • Consumer Representation [2006: 2/10 2008: 2/10]
      • Propensity to Switch [2006: 3/10 2008: 4/10]
    • Currently modest switching levels are likely to have begun slowly developing by 2008
  • Gas MCI: Romania' s gas market score is impacted by a weak Traded Market Maturity metric and weak Customer Pull metrics
    • Romania' s Market Framework metrics show little improvement over the forecast period
      • Effectiveness of Regulator [2006: 4/10 2008: 4.5/10]
      • Ease of Third Party Access [2006: 4/10 2008: 5/10]
      • Effectiveness of Balancing and Data Transfer [2006: 5/10 2008: 5.5/10]
    • Romania' s Supplier Push metrics show only minimal increases during the forecast period
      • Wholesale Market Fragmentation [2006: 6/10 2008: 6.5/10]
      • Retail Market Fragmentation [2006: 3.5/10 2008: 4.5/10]
      • Traded Market Maturity [2006: 0/10 2008: 1/10]
    • None of Romania' s Customer Pull metrics rise above the bottom end of the scale by the end of the forecast period
      • Access to Market Information and Assistance [2006: 2/10 2008: 2.5/10]
      • Consumer Representation [2006: 2/10 2008: 2/10]
      • Propensity to Switch [2006: 1/10 2008: 1.5/10]
    • Romania' s gas switching rates will continue to be modest in both end use sectors
  • Outlook: New market entrants are more likely to find near term commercial opportunities in the Romanian power sector than in the gas sector
    • Romania' s gas market competitive intensity continues to lag behind that seen in the power market
      • Power scores
      • Gas scores
    • Low levels of per capita demand combined with strong economic growth point to significant growth potential
      • New Market Entrant Opportunities, Power
      • New Market Entrant Threats, Power
    • Limited levels of competitive intensity mean that upstream activity is one of the few opportunities available in the short term
      • New Market Entrant Opportunities, Gas
      • New Market Entrant Threats, Gas
  • MCI Scores
• APPENDIX
  • Definitions
  • Ask the analyst
  • List of Tables
    • Table 1: Market Competitive Intensity, Romania 2006-08
    • Table 2: MCI Additive, Europe 2006-2008
    • Table 3: MCI Multiplicative, Europe 2006-2008
  • List of Figures
    • Figure 1: MCI Assessment Scale
    • Figure 2: MCI Assessment Framework
    • Figure 3: MCI Market Coverage
    • Figure 4: MCI Scales
    • Figure 5: MCI Applications
    • Figure 6: European Power Market Competitive Intensity, 2006-08
    • Figure 7: European Gas Market Competitive Intensity, 2006-08
    • Figure 8: Power Market Competitive Intensity, Romania
    • Figure 9: Switching Forecasts, Romania 2008 [Residential: 05% Non Residential:11%]
    • Figure 10: Gas Market Competitive Intensity, Romania
    • Figure 11: Switching Forecasts, Romania 2008 [Residential: 06% Non Residential:12%]
    • Figure 12: Market Competitive Intensity, Romania
    • Figure 13: Scale for MCI Assessment, Effectiveness of Regulator
    • Figure 14: Scale for MCI Assessment, Ease of Third Party Access
    • Figure 15: Scale for MCI Assessment, Effectiveness of Balancing and Data Transfer
    • Figure 16: Scale for MCI Assessment, Wholesale Market Fragmentation
    • Figure 17: Scale for MCI Assessment, Retail Market Fragmentation
    • Figure 18: Scale for MCI Assessment, Traded Market Maturity
    • Figure 19: Scale for MCI Assessment, Traded Market Maturity
    • Figure 20: Scale for MCI Assessment, Access to Market Information and Assistance
    • Figure 21: Scale for MCI Assessment, Consumer Representation
    • Figure 22: Scale for MCI Assessment, Propensity to Switch