The Utilities Recipe for Ensuring Energy Security 12 th CEI Summit Economic Forum. Claudio Zito Country Manager Enel Romania Bucharest, November 2009

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1 The Utilities Recipe for Ensuring Energy Security 12 th CEI Summit Economic Forum Claudio Zito Country Manager Enel Romania Bucharest, November 2009

2 Enel Group at a glance Main Figures mn EBITDA employees 95,4 GW installed capacity 61 million customers Present in 4 continents, 23 countries 2

3 Enel in Romania Presence in the supply sector through: Enel Energie (Banat and Dobrogea) Enel Energie Muntenia (Bucuresti, Ilfov, Giurgiu) Distribution sector: Enel Distributie Muntenia Enel Distributie Banat Enel Distributie Dobrogea Distribution: km electric network Supply: 2.6 million clients 5000 employees 3

4 Enel s industrial strategy for Romania Improvement of quality service for clients through the modernisation of the distribution network in the three regions Commitment to introduce modern technology, knowhow and financial resources Development on the entire value chain: distribution, supply, generation A long term industrial partner, with a clear investment strategy for Romania 4

5 New challenges for energy security Economic crisis reduces capital availability International agreements set challenging targets on climate change Constraints in availability of energy resources is creating increasing concerns together with geo-political situation (i.e.: gas supplies) The business as usual scenario is no more applicable to new challenges 5

6 New challenges for the electricity sector Government EU targets on renewables Emission reductions Lower income for consumers Generators TSOs Distributors Emission trading impact Economy recovery Fuel cost Large nuclear units & small non dispatchable renewables Interconnections with other States System vulnerability Smart grids Long term remuneration of investments Technologies Uncertainties on costs/availability Effectiveness 6

7 Ensuring energy security: roles of States From command and control to regulator & watchdog Support international cooperation and boost burden sharing The States shall create a proper business environment to cope with increased competition, attracting investment and pushing cooperation, technologies, energy saving policies Define coherent and stable policies and implement a fair regulatory framework 7

8 Market principles to boost investments Why market principles? Favor efficiency and optimal capital allocat ion Proven tool for environmental target (e.g. emissions trading) Ease international coordination Provide confidence to investors and lenders Guarantee a fair treatment of all players Overcome cyclical economic downturns 8

9 Current electricity sector in Romania Mandatory investments in old generating assets Need to foster energy independence New investments are needed now in electricity generation, even if the economic crisis is creating some concerns Generation restructuring to sustain modernization Role Role of of private private investments is is crucial crucial for for sector sector development also also due due to to State State budget budget constraints 9

10 Conclusions: how to attract private investments in Romania 1. Progressively reduce State involvement State as regulator and watchdog (not as a player) Foster privatization and partnerships Sales also through stock market 2. Clear and stable rules for all players Sector restructuring finalisation Use of existing platform managed by OPCOM Definitive regulations on Green Certificates 3. Market principles to foster competition No cross-subsidies between generators Prices to reflect full cost (with transparent subsidies for vulnerable customers) Clear rules for supporting large energy consumers and to keep a competitive industry in the country A liberalized and non-distorted market is a necessary condition to modernize the generation sector and to attract significant private investments 10

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