# Commission Decision (EU) 2015/1877Show full title

Commission Decision (EU) 2015/1877 of 20 April 2015 on tariffs charged by S.C. Hidroelectrica SA of Romania to S.C. Termoelectrica            SA and S.C. Electrocentrale Deva SA — SA.33475 (12/C) (notified under document number C(2015) 2648) (Only the English text            is authentic) (Text with EEA relevance)         

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# Commission Decision (EU) 2015/1877                     

# of 20 April 2015

# on tariffs charged by S.C. Hidroelectrica SA of Romania to S.C. Termoelectrica SA and S.C. Electrocentrale Deva SA — SA.33475                        (12/C)                     

# *(notified under document number C(2015) 2648)*

# (Only the English text is authentic)

# (Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union, and in particular the first subparagraph of Article                           108(2) thereof,                        

Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,

Having regard to the decision by which the Commission initiated the procedure laid down in Article 108(2) of the Treaty, in                           respect of the aid SA.33475 (12/C, ex 12/NN)(1),                        

Having called on third parties to submit their comments pursuant to the provisions cited above, and having regard to their                           comments,                        

Whereas:

1.**PROCEDURE**(1)On 2 August 2011, the Commission received a complaint from the investment fund S.C. Fondul Proprietatea SA (‘the complainant’)                                 in relation to the purchase of electricity by S.C. Hidroelectrica SA (‘Hidroelectrica’) from electricity suppliers at prices                                 allegedly set above market level.(2)On 25 April 2012, the Commission informed Romania that it had decided to initiate the procedure laid down in Article 108(2)                                 of the Treaty in respect of the contracts whereby Termoelectrica SA (‘Termoelectrica’) and S.C. Electrocentrale Deva SA (‘Electrocentrale                                 Deva’) supplied electricity wholesale to Hidroelectrica, hereafter referred as the ‘Opening Decision’.(3)The Opening Decision was published in the *Official Journal of the European Union* (2). The Commission called on the Romanian authorities and interested parties to submit their comments.(4)On 23 July 2012 the Romanian Authorities provided the Commission with their preliminary comments on the Opening Decision.(5)The Commission received only preliminary comments from Termoelectrica, dated 11 June 2012 and from Electrocentrale Deva, dated                                 12 June 2012, which the Romanian Authorities forwarded to the Commission on 26 July 2012. The Romanian Authorities forwarded                                 again the same preliminary comments to the Commission on 2 August 2012.(6)On 12 February 2013, the Commission informed the Romanian Authorities that it had not received any comments from interested                                 parties.(7)On 24 March 2013, the Romanian Authorities reiterated their preliminary position in relation to this case.(8)The Commission requested further information from the Romanian Authorities by letters dated 29 July and 11 September 2013,                                 3 March, 6 August and 25 September 2014 and 19 January 2015. The Romanian Authorities provided further information on 11 September                                 2013, 24 March, 14 May, 3 September, 22 September, 10 October and 21 October 2014 and on 20 February 2015.(9)On 16 April 2015, Romania waived its rights under Article 342 of the Treaty in conjunction with Article 3 of Regulation No                                 1(3) to have the decision adopted in Romanian and agreed that the decision be adopted in English.

2.**DESCRIPTION OF THE AID MEASURES**(10)This section describes the contracting parties (i.e.: Hidroelectrica, Termoelectrica, and Electrocentrale Deva), other electricity                                 generators, contracts for the purchase of electricity in the context of the Romanian electricity market and various developments                                 and interlinks between the alleged beneficiaries.2.1.**The contracting parties**2.1.1.*Hidroelectrica*(11)Hidroelectrica was established in 2000. Hidroelectrica is governed by ordinary company law. Its share capital is held by the                                 Romanian State through the Ministry of Economy and Trade (80,06 %) and the complainant (19,94 %). The Romanian State is represented                                 in the Shareholder Meeting's Board of Hidroelectrica. According to Hidroelectrica's Articles of Incorporation, the General                                 Director runs and represents the company's day-to-day business and independently takes decisions on matters other than those                                 reserved for the Shareholders' Meeting Board and the Board of Directors. In practice Hidroelectrica's Directors cumulated                                 functions with government posts(4).(12)Hidroelectrica is Romania's main electricity generator with an annual production capacity of around 17,5 TWh in a normal hydrological                                 year. Hidroelectrica produces electricity through dams and run-of-the-river generation plants. However, this production is                                 subject to wide variations depending on hydrological conditions: in 2009, Hidroelectrica's output was 16,4 TWh, in 2010, it                                 was 21,3 TWh and in 2011, it was 14,7 TWh. In 2013, Hidroelectrica's market share was 28,24 %, ahead of Complexul Energetic                                 Oltenia, a thermo-coal based electricity producer, with 20,83 % market share and Nuclearelectrica with 20,65 % market share,                                 both state-owned companies.(13)Hidroelectrica was placed under insolvency proceedings on 26 June 2012(5) and exited them on 26 June 2013(6). On 25 February 2014, Hidroelectrica was again placed under insolvency proceedings.2.1.2.*The beneficiaries*(14)The suppliers with which Hidroelectrica entered into the contracts under investigation are Termoelectrica and Electrocentrale                                 Deva, two coal-based electricity producers, fully state-owned, directly or indirectly, with an annual production capacity                                 at the date of signature of the contracts of 1,7 TW and 1,3 TW respectively and market shares of 3 % and 5 % in 2009(7) and of 1,9 % and 4,1 % in 2011(8). Termoelectrica and Electrocentrale Deva sold electricity produced from costly uncompetitive indigenous coal(9).(15)Electrocentrale Deva was a division of Termoelectrica until the end of December 2001 when it was incorporated as a separate                                 company, along with other state-owned divisions (CE Craiova, Electrocentrale Bucuresti, CE Rovinari, etc.). The sole shareholder                                 of Electrocentrale Deva was Termoelectrica until 27 March 2012.2.2.**Other market information**(16)Electricity generation in Romania is dominated by state-controlled companies, which together hold a market share of approximately                                 90 %(10). Total net electricity generation in Romania amounted to 60,38 TWh in 2011. The generation mix consists mainly of hydro (approximately                                 28 % of total generation), nuclear (approximately 18 %) and fossil-fuel-based (approximately 51 %) power plants(11).(17)The Romanian market is interconnected with, notably, Bulgaria, with 400 MW net transfer capacity in 2009-2010 and Hungary,                                 with 500-800 MW net transfer capacity in 2009-2010. The net capacity of interconnection with these Member States was not fully                                 used in that period, due to congestion. During the period 2009-2011, the flux of imports and exports of electricity into and                                 from Romania were as follows: (i) in 2009, imports of electricity amounted to 676 GWh, while exports amounted to 3 154 GWh                                 (approximately 4,8 % of the all the electricity produced in Romania); (ii) in 2010, imports of electricity amounted to 943                                 GWh, while exports amounted to 3 854 GWh (approximately 3,4 % of the all the electricity produced in Romania); (iii) in 2011,                                 imports of electricity amounted to 1 036 GWh, while exports amounted to 2 942 GWh (approximately 2,8 % of all the electricity                                 produced in Romania).2.3.**The contracts**(18)The contract with Termoelectrica was concluded on 30 July 2008(12), while the contract with Electrocentrale Deva was concluded on 9 June 2009 (collectively referred to in this Decision as                                 ‘the Contracts’), for a duration of 10 years. The Contracts were terminated by Hidroelectrica's judicial administrator Euro-Insol                                 during Hidroelectrica's insolvency procedure, at the end of August 2012(13).(19)By notes to the Romanian Ministry of Economy and Trade, Termoelectrica and Electrocentrale Deva requested approval from that                                 Ministry for the signature of the Contracts, as set out in recitals 20 to 22:(20)On 15 July 2008 by note number 7323, Termoelectrica stated the following: ‘(...) Termoelectrica SA has analysed several methods                                 of solving this urgent problem and the only variant with any prospect of rapid success and that does not require EU approval                                 is the following: Signature of a long-term (10 year) contract between Termoelectrica SA and Hidroelectrica SA for the purchase                                 of the electricity produced by generation unit no 4 of CET Paroșeni. The contract price will be the price for CET Paroșeni                                 established by ANRE on the regulated market, based on the justified costs of Termoelectrica SA; and Signature with Compania                                 Națională a Huilei Petroșani of a long-term (approx. 10 year) contract to acquire coal. For Termoelectrica SA (SE Paroșeni)                                 and even for the Compania Națională a Huilei(14), this (...) would ensure the long-term future of the two companies located in the Jiu Valley.’(21)On 27 May 2009, by note number 10855 Electrocentrale Deva, requested the following: ‘(...) In order to prevent the company from                                 going bankrupt and to create the conditions necessary for the financing and implementation of the investments needed to continue                                 running, we ask that you give your approval for the negotiation and conclusion of a 10-year contract between Electrocentrale                                 Deva and Hidroelectrica București for the sale to Hidroelectrica of a quantity of electricity corresponding to an average                                 power of 150 MW in addition to the quantity delivered on the regulated market and at a price approved by ANRE that will cover                                 the justified production costs.’(22)The two Notes were approved by representatives of the Romanian Ministry of Economy and Trade, at the level of Minister and/or                                 State Secretary. The Contracts state that they were concluded on the basis of those notes.(23)In the contract with Termoelectrica, neither Hidroelectrica nor Termoelectrica had the possibility to terminate the contract.                                 In the contract with Electrocentrale Deva, both Hidroelectrica and Electrocentrale Deva had the possibility to terminate the                                 contract in the following circumstances: (i) loss by the other party of its quality of producer, within five working days                                 from the date when this quality was lost; (ii) refusal of either of the parties to conclude a new contract or to amend the                                 existing contract, in the event of a change in the economic and technical circumstances existing at the date of its conclusion;                                 (iii) in other cases stipulated by any applicable laws or regulations(15).(24)The contract with Termoelectrica had the following particulars: (i) the contractual price would be established annually by                                 the Romanian Energy Regulatory Authority (‘ANRE’) based on the costs of production justified by Termoelectrica; (ii) Hidroelectrica                                 would buy all the electricity produced by Paroseni Plant each month(16). From the date of its signature and until its termination by the judicial administrator, the contract was modified eight                                 times (seven addendums consisted of price adjustments)(17).(25)The contract with Electrocentrale Deva had the following particulars: (i) the contractual price would be established by ANRE                                 based on the costs of production justified by Electocentrale Deva; (ii) if ANRE no longer regulated electricity prices, the                                 price was to be negotiated by the parties and was not to be lower than the contractual price in the previous year; (iii) the                                 contractual parties would not charge any penalty or any other charge in the event if the seller failed to supply the contractual                                 quantity of electricity or the buyer failed to pay the contractual price(18). From the date of its signature and until its termination by the judicial administrator, the contract was modified five times(19) (all changes consisted of price adjustments).(26)Despite clear provisions in both Contracts, according to which the contractual price was to be established by ANRE, as a rule,                                 in practice the price adjustments were made upon prior approval of the Ministry of Economy and Trade, with three exceptions(20).(27)For instance, through note (date illegible), Hidroelectrica sought approval from the Ministry of the Economy and Trade for                                 the adjustment of the prices for the period 1 August 2009 — 31 December 2009, due to ‘increases of the production costs’.                                 In the same note, it is clearly mentioned that the ‘purpose of the conclusion and the performance of the two contracts is                                 to sell in the competitive market an amount of hard coal based electricity mixed with hydropower, and also to provide the                                 two thermal power producers with a contract accepted by the financial institutions as a mortgage, in order to obtain long-term                                 loans necessary to make the investments required to maintain the electricity generation licences’.(28)Similarly, through another note, Hidroelectrica sought approval from the Ministry of the Economy and Trade in order to maintain                                 the 2009 price 230 Ron/MWh for the period from 1 January 2010 until 31 March 2010 in order ‘to obtain the revenue required                                 to continue the on-going restructuring of the producer of hard coal for electricity generation and the producer of thermal                                 power (...)’.(29)Moreover, after conclusion of the Contracts, through note number 6547 of 2011, Hidroelectrica sought approval from the Minister                                 of the Economy and Trade to adjust the prices for year 2011 in order to allow Termoelectrica and Electrocentrale Deva: ‘to                                 obtain long-term loans necessary to make the investments required to maintain electricity generation licences and also to                                 obtain the revenues needed for the restructuring of the producer Compania Nationala a Huilei’.(30)All those notes also clearly state that Hidroelectica was seeking approval from the Ministry of Economy and Trade ‘to authorise                                 the executive management of the three electricity producers to sign the addendums concerning the new prices’.(31)In addition, all addendums to the Contracts relating to price adjustments refer to internal notes issued by Hidroelectrica                                 and approved either by the Minister of the Economy and Trade or by the State Secretary in the Ministry of Economy and Trade                                 with the three exceptions mentioned in recital 26, based on which such price adjustments were approved(21).(32)The quantities of electricity purchased and average prices paid under the Contracts between 2009 and 2011 are as follows(22):200920102011Electrocentrale DEVAQuantity (GWH)499,8308,6146,4Purchase price (RON/MWh)230,2234,0234,0200920102011TermoelectricaQuantity (GWH)900,7804,6648,9Purchase price (RON/MWh)227,4230,0234,42.4.**The Romanian electricity market**(33)Electricity trading in Romania mainly takes place on two markets: (i) the Regulated Electricity Market on which electricity                                 is traded based on regulated tariffs and conditions; and (ii) the Competitive Electricity Market on which electricity is traded                                 freely, including through two main types of contracts: relatively standard bilateral contracts traded on the centralised market                                 and freely negotiated bilateral contracts, the so-called market for directly negotiated contracts.2.4.1.*The Regulated Electricity Market*(34)The transactions on the Regulated Electricity Market are implemented through sale-purchase framework agreements concluded                                 between the electricity generators/producers active on the regulated market, including Hidroelectrica, and the ‘suppliers                                 of last resort’, which ensure distribution of electricity to the end-user. The eligible customers buy electricity at regulated                                 tariffs. On the regulated market, ANRE sets the prices and volumes to be delivered by the electricity generators/producers                                 ex ante every year. By 2009-2010, when the contracts under examination started to be implemented, 56-61 % of electricity consumed                                 in Romania was traded on the regulated market.2.4.2.*The Competitive Electricity Market*(35)Since 2005, the Competitive Electricity Market in Romania has been divided into five specific markets: (i) the centralised                                 markets administrated by OPCOM; (ii) the market for directly negotiated contracts; (iii) the ancillary services market; (iv)                                 the balancing market; and (v) the export market.(36)The centralised markets are administrated by OPCOM. OPCOM was set up in 2001 pursuant to Government Decision No 627/2000,                                 as a joint stock company and 100 % owned subsidiary of Transelectrica, the transmission system operator. By virtue of the                                 licence granted by ANRE, OPCOM was designated as platform for trading of electricity in Romania at wholesale level. OPCOM                                 is the only power exchange in Romania, providing a venue for trade of electricity and having a facilitator role.(37)There are five types of market segments on OPCOM: (i) the day-ahead market; (ii) intra-day market(23), (iii) centralised bilateral markets that is to say, centralised market for bilateral contracts through public auction ‘OPCOM-PCCB’                                 and centralised market for bilateral contracts through continuous negotiation — CMBC-CN; (iv) the centralised market for green                                 certificates; and (v) the trading platform for greenhouse gases emissions certificates. Transactions on OPCOM started only                                 in 2005 and only on the day-ahead and OPCOM-PCCB market segments.(38)The Contracts were concluded on the market for directly negotiated contracts in Romania, which is the market segment relevant                                 for the assessment in this case.2.4.3.*OPCOM-PCCB*(39)On the OPCOM-PCCB market segment, OPCOM organises public auctions for the sale and purchase of electricity. Sale/purchase                                 offers by each producer/supplier/consumer are submitted to the market operator. Each offer must specify the following: (i)                                 either the minimum price at which the party will sell electricity or the maximum price at which it will buy electricity; and                                 (ii) the framework agreement under which the party making the offer is planning to supply/purchase electricity. Sale and purchase                                 offers specify supply conditions including the amount of electricity, duration (minimum one month and up to one year), as                                 well as envisaged framework agreement. The price follows the principle of the best responding offer price. By 2009 and 2010,                                 when the Contracts started to be implemented, sales on the OPCOM-PCCB market amounted to less than 7 % of electricity produced                                 in Romania.(40)After publication of the Opening Decision, the Commission adopted a Decision pursuant to Article 102 of the Treaty finding                                 that the power exchange managed by OPCOM constitutes a relevant service market, on which OPCOM is a dominant player, separate                                 from the directly negotiated contracts market(24).2.4.4.*The market for directly negotiated contracts*(41)The market for directly negotiated contracts is a free market which is not regulated by ANRE. Contracting parties negotiate                                 quantities, prices and other contractual clauses bilaterally. This provides the parties with a high degree of flexibility                                 in negotiating the terms and conditions of the sale contracts. The terms and conditions of contracts are confidential.2.4.5.*Short description of the directly negotiated contracts contemporaneous with the Contracts*(42)By letter dated 21 February 2014, the Commission requested the Romanian Authorities to provide it with information about bi-laterally                                 negotiated contracts concluded on the Romanian market, other than the Contracts, with comparable durations and quantities                                 of electricity supply. The Commission's request covered all Romanian electricity suppliers, whether State or privately owned.                                 On 14 May 2014, the Romanian Authorities provided the requested key elements of all contracts signed by electricity buyers                                 with an annual electricity consumption of more than 150 GWh for each of the years from 2009 to 2011(25).(43)The Romanian Authorities underlined that all the contracts concluded on the retail market under competitive conditions by                                 non-household consumers in the relevant period of time were subject to the ad-hoc data collection requested by the Commission.                                 In particular, 75 sets of annual data from contracts in force for one or more years during the period 2009-2011 of relevance                                 for this case were submitted by the Romanian Authorities. The Commission understands that the Romanian Authorities submitted                                 the relevant data regarding all the contracts fulfilling the criteria required by the Commission (comparable durations and                                 quantities) for the relevant period 2009-2011. The Contracts accounted for approximately 17 % of the total volume of electricity                                 subject to directly negotiated contracts concluded during the period 2009-2011 and provided by Romania.(44)The data submitted by the Romanian Authorities reveals the level of the highest prices paid on the free market for retail                                 sales of electricity during the period 2009-2011, as follows: for 2009: 266,5 RON/MWh; for 2010: 229,96 RON/MWh and for 2011:                                 232,33 RON/MWh. However, each of those contracts taken on its own amounted to lower quantities than each of the Contracts.(45)An examination of the information regarding the contracts entered into by suppliers other than Termoelectrica and Electrocentrale                                 Deva shows that, in 2009, when the Contracts started to be implemented, no other supplier concluded a supply contract which                                 was sufficiently similar to these two Contracts as regards to quantities (approximately 900 GWh and 500 GWh, each) and duration                                 (10 years). A totally meaningful comparison with the Contracts is only possible for other contracts for the same quantities,                                 duration and/or date of entry into force. Since no such fully comparable contracts existed, an econometric analysis accounting                                 for contract differences is required, the rationale and results of which are portrayed in recitals 77-80 and the Annex.2.4.6.*Hidroelectrica contracts for sale of electricity*(46)During the period 2009-2011, Hidroelectrica was also selling around 60 % of its electricity to other private buyers through                                 long term wholesale and retail contracts, which are under investigation by the Commission(26). The selling prices of Hidroelectrica in those contracts were more than 40 % lower than the wholesale purchase prices paid                                 by Hidroelectrica to Termoelectrica and Electrocentrale Deva on average. By way of illustration, the highest selling price                                 for electricity under such contracts was 159,8 RON/MWh in 2009 and 168 RON/MWh in 2010.(47)Hidroelectrica also concluded sale of electricity contracts with other parties(27), for lower quantities. The highest selling price for electricity under such retail contracts for the relevant period was                                 185 RON/MWh in 2009, 190 RON/MWh in 2010 and 160 RON/MWh in 2011, that is, around 13 % lower on average than the wholesale                                 purchase prices paid by Hidroelectrica to Termoelectrica and Electrocentrale Deva.2.5.**Developments after 2011 and interlinks between Termoelectrica, Electrocentrale Deva, Electrocentrale Paroseni and CEH**(48)Termoelectrica's Paroseni Plant, which actually supplied the quantity of electricity purchased under the Contract with Termoelectrica,                                 became a separate entity and was incorporated with the Romanian Trade Registry under the name Electrocentrale Paroseni, on                                 11 July 2011(28). On 22 September 2011, Electrocentrale Paroseni took over all the rights and obligations of Termoelectrica under its Contract                                 with Hidroelectrica. Electrocentrale Paroseni supplied electricity to Hidroelectrica in September and October 2011, although                                 the quantities were negligible.(49)At the date of ceasing of supply under the Contracts, Termoelectrica was still the sole shareholder of both Electrocentrale                                 Deva and Electrocentrale Paroseni.(50)Through Emergency Ordinance No 84/2011(29), a debt to equity swap was implemented between Termoelectrica and the State. Thus, Termoelectrica transferred its shares                                 in different companies (Electrocentrale Deva, Electrocentrale Paroseni and Electrocentrale Bucuresti) to the State, in payment                                 of its debts to the State. This transfer of the shares was made based on the basis of evaluation reports, made by an independent                                 evaluator.(51)Electrocentrale Paroșeni and Electrocentrale Deva merged into a single legal entity named Complexul Energetic Hunedoara (‘CEH’),                                 a fully state-owned company, registered with the Romanian Trade Registry on 1 November 2012. CEH took over all the rights                                 and obligations of Electrocentrale Paroseni and Electrocentrale Deva. On 1 August 2013, CEH also took over Societatea Nationala                                 a Huilei, a spin-off of the mines of the state-owned Compania Nationala a Huilei which delivered coal to Termoelectrica and                                 Electrocentrale Deva. At present, all three companies qualify as branches of CEH, without legal personality.(52)Termoelectrica is in liquidation(30) and has assets with a market value of approximately EUR 80 million and a liquidation value of approximately EUR 60,5 million                                 according to a report dated 1 October 2013. However, the debts of Electrocentrale Deva, Electrocentrale Paroseni and Electrocentrale                                 Bucuresti remained with Termoelectrica.(53)The developments after 2011 with regard to Termoelectrica and Electrocentrale Deva, as well as the various interlinks explained                                 in recitals 48-52 are illustrated for ease of reference in the following graph:
                            

3.**GROUNDS FOR INITIATING THE FORMAL INVESTIGATION PROCEDURE**(54)In the Opening Decision, the Commission expressed doubts as to whether the prices for the purchase of electricity under the                                 Contracts were market conform and whether they constituted State aid. Should the latter be the case, the Commission expressed                                 doubts whether such aid would be compatible with the Treaty.(55)The Commission compared the prices stipulated in the Contracts with the prices at which electricity was traded on OPCOM-PCCB                                 and noted that the prices at which Hidroelectrica purchased electricity from the alleged beneficiaries were between 40 % and                                 55 % higher than the prevailing price of electricity on the open electricity exchange market OPCOM-PCCB. It appeared that                                 Hidroelectrica therefore incurred higher costs than necessary, while the alleged beneficiaries were granted an aid which increased                                 their revenues, without being intended to achieve any specific objective of common interest. The Commission thus took the                                 preliminary view that the alleged beneficiaries had derived an undue advantage in the form of artificially inflated electricity                                 prices in their Contracts and successive amendments to them.(56)The Commission reached the preliminary conclusion that the electricity tariffs under examination were selective in nature,                                 since they applied only to certain undertakings.(57)Furthermore, the Commission reached the preliminary conclusion that the preferential electricity tariffs could involve a transfer                                 of State resources which would be imputable to the State since Hidroelectrica was controlled by the Romanian State (in 80,06                                 % of its share capital was owned by Romania). In addition, the Commission referred to the Ministerial Order No 445/2009, through                                 which the representatives of the Ministry of Economy, Trade and Business Environment, members of the Administration Boards                                 of the state-owned electricity companies, were obliged to ensure that as of 31 March 2010 electricity destined for the wholesale                                 market should be traded exclusively on OPCOM.(58)Consequently, the representatives of the Ministry of Economy and Trade had control, or at least influence, over state-owned                                 companies' contracting practice, including Hidroelectrica's contracting practice. This could have an effect on intra-Union                                 trade, within the meaning of Article 107(1) of the Treaty.(59)The Commission preliminary conclusion was that if the Contracts entailed State aid then they would have been considered as                                 aid granted in breach of the notification and stand-still obligations established in Article 108(3) of the Treaty.(60)In light of the above, the Commission reached the preliminary conclusion that the preferential electricity tariffs could potentially                                 involve State aid and invited Romania to provide sufficient information to alleviate its doubts.

4.**COMMENTS FROM ROMANIA**(61)The Romanian Authorities abstained from providing any observations on whether or not the Contracts entailed State aid. On                                 24 March 2013, Romania provided observations on third parties' comments regarding other cases involving Hidroelectrica, which                                 were also covered by the Commission's investigation(31). The Romanian Authorities again abstained from providing any views.(62)Within the formal investigation procedure, the Romanian Authorities were requested to explain the economic rationale of concluding                                 the Contracts. Romania did not provide any justification in this respect. Romania only argued that the Contracts allowed Hidroelectrica                                 to better quantify a maximum value of the costs incurred when purchasing electricity, providing it protection against the                                 volatility of the prices on the spot market.(63)Moreover, the Romanian Authorities also clarified that the Contracts were not agreements of assistance as defined in Hidroelectrica's                                 Judicial Administrator Report regarding the causes of Hidroelectrica's insolvency(32). According to that report, agreements of assistance are those contracts concluded by Hidroelectrica in order to cover discontinuities                                 in its production. The purpose of that type of contract is to prevent the payment of any damages triggered by non-respect                                 of a contractual commitment to supply.(64)The Romanian Authorities clarified(33) why in practice, with the exception of the three instances mentioned in recital 28, ANRE did not establish the contractual                                 prices as provided under the Contracts. It was explained that the Contracts were not concluded on the regulated market and                                 therefore the price was not adjusted by ANRE. The Romanian Authorities also explained that: (i) initially ANRE provided the                                 Ministry of Economy and Trade with a minimum and maximum threshold based on which the prices were established; (ii) such thresholds                                 were established on the basis of clear technical parameters specific to thermo-electricity producers; (iii) ANRE subsequently                                 stopped this practice and the Ministry of Economy and Trade took it over, on the basis of similar principles to those used                                 by ANRE.(65)As regards the Contract with Termoelectrica, the Romanian Authorities confirmed that Hidreoelectrica was the sole electricity                                 consumer for Termoelectrica's Paroseni Plant. In addition, it was clarified that Hidroelectrica did not purchase the entire                                 electricity quantity as initially estimated under the Contract, but instead it only purchased the quantity needed in order                                 to cover any fluctuations in production, due to the unpredictable evolution of hydro conditions.(66)As regards the Contract with Electrocentrale Deva, the Romanian Authorities clarified that during the relevant period 2009-2011,                                 Electrocentrale Deva also sold electricity to clients other than Hidroelectrica. It was thus shown that in the years 2010                                 and 2011, Electrocentrale Deva sold large quantities of electricity (comparable or even higher quantities) to customers other                                 than Hidroelectrica for comparable prices(34).

5.**COMMENTS FROM THIRD PARTIES**(67)In their preliminary observations on the Opening Decision, both Termoelectrica and Electrocentrale Deva claimed that neither                                 the initial contractual prices nor their subsequent changes conferred any advantage on them, arguing that such prices were                                 established by ANRE and calculated on the basis of their production costs.(68)In addition, Romania argued that the subsequent changes in the contractual prices were determined by the increase in the price                                 of oil(35) or coal(36). Electrocentrale Deva also claimed that the price of electricity was approximately 70 % influenced by the price of coal.

6.**ASSESSMENT**(69)In this decision, the Commission assesses whether Termoelectrica and Electrocentrale Deva received State aid within the meaning                                 of Article 107(1) of the Treaty, see recital 101, and if so, whether such aid might be compatible with the internal market,                                 see recitals 102 to 105.6.1.**Existence of State aid**(70)Article 107(1) of the Treaty provides that any aid granted by a Member State or through State resources in any form whatsoever,                                 which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods and                                 affects trade among Member States, is incompatible with the internal market.(71)The conditions laid down in Article 107(1) of the Treaty are cumulative and thus for a measure to be qualified as State aid                                 all the conditions must be fulfilled simultaneously.6.1.1.*Assessment of the economic advantage*(72)For the purpose of Article 107(1) of the Treaty, in order to determine whether an economic advantage not otherwise available                                 at market conditions was granted to Termoelectrica and Electrocentrale Deva as a result of the conclusion and implementation                                 of the Contracts, it is necessary to determine what prices at market conditions were in Romania in the period between 2009                                 and 2011, for similar transactions.(73)In that respect, contrary to the preliminary view held in the Opening Decision, the investigation has shown that the terms                                 and durations of electricity supply contracts concluded in OPCOM-PCCB are not sufficiently similar to those of the Contracts,                                 notably as to duration and bespoke, bi-laterally negotiated conditions (recitals 18, 23-25, 39 and 40). In well-functioning                                 electricity markets with adequate liquidity and forward instruments allowing predictability of prices for future deliveries,                                 spot prices are a good indication or proxy of market prices, capable of being used as benchmarks to assess price levels in                                 specific contracts. However, in this case, given the still relatively high proportion of demand being served at regulated                                 tariffs in Romania in 2009, the limited liquidity of OPCOM trading platforms in the period 2009-2011, and the fact that the                                 power exchanges managed by OPCOM were designated as a relevant antitrust market subject to abuse of dominant position (recitals                                 34-40), it is appropriate to rely on suitable benchmarks other than prices in OPCOM PCCB for assessing the possible presence                                 of an economic advantage over market prices.(74)However, in that respect, the similarity of prices with those paid by buyers other than Hidroelectrica or the cost-based justification                                 put forward by Romania and the beneficiaries (recitals 66-68), are not valid indication that the contract conditions and prices                                 at issue were in line with market conditions.(75)As a matter of fact, the prices paid by Hidroelectrica to Electrocentrale Deva between 2009 and 2011 were similar to prices                                 paid by other electricity distribution companies, State and privately owned, which were purchasing electricity from Electrocentrale                                 Deva. However, those purchases were taking place between Electrocentrale Deva and electricity distribution companies, which                                 were selling electricity to households and small businesses on the retail market at regulated prices and conditions (recital                                 34). Hidroelectrica was buying electricity on the wholesale market for retail resale on the competitive market to industrial                                 consumers and/or traders, on which prices and quantities were not regulated and buyers could refrain from buying from expensive                                 sellers, like Termoelectrica and Electrocentrale Deva and chose the cheapest supplier, independent of its production costs.                                 Therefore, even if prices were similar and assuming that sales of Termoelectrica and Electrocentrale Deva on the regulated                                 market allowed for cost-recovery, the prices paid by the electricity distribution companies to Termoelectrica and Electrocentrale                                 Deva are not comparable with and cannot constitute a valid benchmark for the prices paid by Hidroelectrica on the competitive                                 free market.(76)Likewise, the cost justification adduced by Termoelectrica and Electrocentrale Deva and the Romanian authorities only explains                                 why the prices at which Termoelectrica and Electrocentrale Deva were capable of selling without loss were high. This justification                                 does not establish that these prices were in line with market prices determined under competitive conditions such as those                                 under which Hidroelectrica should have concluded and implemented the Contracts, if these Contracts were to be deemed to entail                                 no State aid.(77)For the purposes of establishing whether the contractual prices were in line with market conditions in Romania, it is appropriate                                 to compare them with the price conditions prevailing for other bi-laterally negotiated contracts contemporaneous with the                                 Contracts on the free market. The Commission used the Dataset provided by the Romanian authorities, considering it the best                                 available source of evidence to reflect the market conditions in Romania (recitals 42-45). As indicated in recital 45, no                                 long-term contract concluded or in force in 2009 replicates the characteristics of the Contracts. Therefore, the Commission                                 carried out an econometric analysis in order to estimate a price benchmark based on electricity contracts contemporaneous                                 with the Contracts throughout the relevant period. A detailed technical description of the econometric analysis and its results                                 is provided in the Annex.(78)In the absence of a definite reference to establish the ‘market conditions’, in order to check whether the Contracts had prices                                 above market level, a benchmark of market prices was estimated as a proxy, under conservative assumptions, namely, by accounting                                 for important deviations upwards from the estimated market price. Based on this conservative approach, the Commission performed                                 a comparison of the prices of the Contracts against the benchmark market price, yearly, between 2009 and 2011. The comparison                                 was made yearly because the selling prices under the Contracts were increased every year.(79)The analysis shows that, based on the benchmark prices and under conservative assumptions, the prices charged by Termoelectrica                                 to Hydroelectric were above market prices. If due account is taken of the fact that the comparison of transactions at wholesale                                 level for the Contracts is carried out with contracts at the retail level, by adding a 5 % retail margin charged on average                                 by traders on the Romanian market, the difference with market prices is: 18,8 RON/MWh in 2010 and 19,8 RON/MWh in 2011 for                                 Termoelectrica and 17,5 RON/MWh in 2010 and 13,9 RON/MWh in 2011.(80)The econometric analysis therefore provides a first indication that the Contracts provided Termoelectrica and Electrocentrale                                 Deva with an economic advantage over market conditions. However, the mere fact that prices under the Contracts were assessed                                 to be above benchmark prices of similar contracts is not sufficient to establish that these contracts would not have been                                 entered into and maintained in force by a market operator acting in lieu of Hidroelectrica. Objective reasons may still mean                                 that high price levels alone cannot be deemed to afford an economic advantage above market conditions to electricity sellers.                                 It is therefore necessary that additional evidence of prices above market conditions corroborates the robustness of the results                                 of the econometric analysis.(81)In that respect, it is appropriate to establish whether Hidroelectrica behaved in a way comparable to that of a private economy                                 operator in a similar situation (‘the market economy operator test’/‘MEOP’)(37). The Commission assessed therefore whether a private operator placed in a similar situation would have behaved in the same                                 way as Hidroelectrica when entering into and maintaining the Contracts. In this context, the following circumstances described                                 below in recitals 82-85 and concerning the conclusion and implementation of the Contracts are relevant.(82)First, at the date of conclusion of the Contracts other cheaper sources of electricity were available to Hidroelectrica on                                 the market; for example: in 2008-2009, Nuclearelectrica offered electricity for 153 RON/MWh compared to 227 RON/MWh for Termoelectrica                                 and 230 RON/MWh for Electrocentrale Deva(38).(83)Second, Hidroelectrica could only sell the electricity purchased from Termoelectrica and Electrocentrale Deva to third parties                                 at a loss. As shown in recitals 46 and 47, Hidroelectrica's retail selling prices on the free market were significantly lower                                 than these wholesale purchase prices and the highest price at which Hidroelectrica resold electricity on the directly negotiated                                 contracts market was 190 RON/MWh, in 2010, compared to a purchase price of 230 RON/MWh for Termoelectrica and 234 RON/MWh                                 for Electrocentrale Deva. It follows that, based on those prices, every single MWh purchased from Termoelectrica and Electrocentrale                                 Deva was resold by Hidroelectrica at loss.(84)In that respect, the investigation did not provide any explanation why Hidroelectrica agreed to purchase the entire output                                 of Termoelectrica's Paroseni power plant (recital 24). A commitment to buy whatever output a power plant produces on 10-year                                 long-term basis is a strong indication that Hidroelectrica did not need the contracts to honour its own supply contract obligations.                                 This is furthermore confirmed by Romania (recital 63). On the contrary, the need to support the expensive and uncompetitive                                 operation of the two companies and the coal mines which supplied them was put forward by the company managers of Termoelectrica                                 (recital 20) and Electrocentrale Deva (recital 21) to the responsible Minister as the reason why Hidroelectrica should enter                                 into the Contracts.(85)However, when entering into commercial transactions, if public undertakings take into account considerations of support to                                 ailing companies or sectors for social or economic policy reasons which are extraneous to their commercial interests and enter                                 into such transactions under conditions which a normal market operator would not accept, the conditions accepted, as to purchase                                 prices by Hidroelectrica in this case, might entail an undue economic advantage for the other party or parties, thus fulfilling                                 one of the conditions of application of Article 107(1) of the Treaty.(86)It follows that by entering into and maintaining the Contracts, Hidroelectrica did not behave as a market economy operator.                                 Accordingly, this test also corroborates qualitatively the result of the econometric analysis indicating that the Contracts                                 granted to Termoelectrica and Electrocentrale Deva an economic advantage not otherwise available under market conditions.(87)The data provided by the Romanian authorities did not cover long term contracts with exactly the same conditions as regards                                 the quantity and duration as the Contracts. In the absence of a definite reference to establish the ‘market conditions’, the                                 Commission therefore compared, on a yearly basis, the contract prices paid by Hidroelectrica with the highest prices applied                                 in Romania between 2009 and 2011 in long-term retail contracts provided by Romania (see recitals 42 to 45).(88)This comparison relies on the conservative assumption that Termoelectrica and Electrocentrale Deva could have replaced their                                 Contracts with Hidroelectrica by several contracts with other buyers on the market offering the highest prices and is very                                 conservative: instead of taking as a market price the average, median or mode in comparable transactions, the market price                                 is taken to be the most expensive price found in several, not fully comparable transactions. Given the lack of homogeneity                                 of the transactions, and the existence of potential factors or anomalies that may contribute to explain the price level agreed                                 in the highest-price transactions taken as a reference, this approach is favourable to the beneficiary, as it may potentially                                 underestimate the advantage received. The weighted average prices for the quantities of electricity effectively supplied to                                 Hidroelectrica by Electrocentrale Deva and Termoelectrica between 2009 and 2011 (recital 32) were as follows:*(in RON/MWh)*200920102011A) Price Electrocentrale Deva230,2234,0234,0B) W.A. Market price241,9224,2229,6Difference A – B< 09,84,4*(in RON/MWh)*200920102011A) Price Termoelectrica227,4230,0234,4B) W.A. Market price229,0213,4220,1Difference A – B< 016,614,3(89)Compared under these conservative assumptions, the average prices paid by Hidroelectrica to Termoelectrica and Electrocentrale                                 Deva still turn out to be above those highest prices in 2010 and 2011, thus corroborating the findings of the econometric                                 analysis. The prices charged by Termoelectrica to Hidroelectrica were 16,6 RON/MWh above the highest prices in 2010 and 14,3                                 RON/MWh in 2011, whilst the prices charged by Electrocentrale Deva to Hidroelectrica were 9,8 RON/MWh above the highest prices                                 in 2010 and 4,4 RON MWh in 2011.(90)In view of the above, it can be concluded that the Contracts favoured Termoelectrica and Electrocentrale Deva by affording                                 them an economic advantage not available under market conditions.(91)Therefore, the Commission concludes that Hidroelectrica did not act as a market economy operator would have done in the circumstances                                 and conferred an undue economic advantage on Termoelectrica and Electrocentrale Deva.6.1.2.*State resources and imputability*(92)In order to be considered aid in the sense of Article 107(1) of the Treaty, a measure must be granted directly or indirectly                                 from State resources and it must be imputable to the State.(93)As shown in recital 11, Hidroelectrica is directly controlled by the Romanian State. It follows those resources foregone by                                 Hidroelectrica amount to State resources foregone by Romania. The Romanian State also appoints Directors to its Board. Moreover,                                 those Directors simultaneously exercised political responsibilities in the Ministry which controls the State's holding in                                 Hidroelectrica.(94)According to settled case law, the ability of the State to control the entities involved in granting the measures does not                                 justify automatically the presumption that the entities' actions are imputable to the State. The Court of Justice of the European                                 Union has explained the notion of imputability to the State of decisions involving the funds of public undertakings in *Stardust Marine* judgement. The resources of a public undertaking are to be considered State resources and actions concerning them are considered                                 to be imputable to the State if the State is capable, by exercising its dominant influence over such an undertaking, to direct                                 the use of its resources(39).(95)The Court of Justice provided indicators for establishing imputability to the State which are: integration of the public undertaking                                 into the structures of the public administration; the nature of its activities; the legal status of the undertaking; the intensity                                 of the supervision exercised by the public authorities over the management of the undertaking or any other indicator showing                                 an involvement by the public authorities in the adoption of a measure or the unlikelihood of their not being involved. Regard                                 must also be had in this case to the compass of the Contracts, their content or the conditions which they contain.(96)It is therefore necessary to examine whether the Romanian Authorities must be regarded as having been involved, in one way                                 or another, in concluding and maintaining the Contracts in force and in modifying the contract prices.(97)In this regard, the Ministry of Economy and Trade, was actively involved in the decision making process concerning the conclusion                                 of the Contracts and the subsequent contractual price readjustments. In particular, Termoelectrica and Electrocentrale Deva                                 received the approval of the Ministry of Economy and Trade to sign the Contracts with Hidroelectrica which *de facto* implies that it is the Romanian State which ultimately exercised the decisive influence over the latter (recitals 19-22).                                 This is further confirmed by the fact that Hidroelectrica directly sought the approval of the Romanian Ministry of Economy                                 and Trade for the price readjustments (recitals 26-31).(98)This direct evidence is corroborated by the loss-making nature of Hidroelectrica's purchases and the lack of economic rationale                                 of committing to buy the entire output of Paroseni's power plant (recitals 84-85). The Contracts appear to be motivated by                                 the delicate financial situation of the two other state-owned generators and social considerations about coal production (recitals                                 20-21). Ultimately, the three state-owned electricity generators, as well as the state-owned coal mines, were owned by and                                 under the responsibility of the State from which Termoelectrica and Electrocentrale Deva sought a means to finance their current                                 operations.(99)The above confirms the preliminary view expressed by the Commission in the Opening Decision that the Contracts and their execution                                 were not rational and independent commercial decisions of Hidroelectrica but resulted from the exercise of dominant influence                                 by the Romanian State.(100)Therefore, the Commission concludes that there is direct evidence showing that the conclusion of the Contracts and their implementation                                 are imputable to the Romanian State. Furthermore, considering that the conclusion and the implementation of the Contracts                                 involve a loss of resources of Hidroelectrica, which is a public undertaking, the Commission concludes that those measures                                 are granted through States resources.6.1.3.*Selectivity*(101)To be considered State aid, a measure must be specific or selective in that it favours only certain undertakings or the production                                 of certain goods.(102)The Contracts were concluded with two specific suppliers, Termoelectrica and Electrocentrale Deva, individually granting them                                 undue economic advantages. No other supplier of electricity to Hidroelectrica benefitted from similar conditions to those                                 ones provided for in the Contracts. The economic advantages stemming from the excessively high contract prices are, therefore,                                 selective.6.1.4.*Distortion of competition and effect on trade*(103)When aid granted by a Member State strengthens the position of an undertaking compared to other undertakings competing in                                 intra-Union trade, the latter must be regarded as affected by that aid. In particular, a distortion of competition within                                 the meaning of Article 107(1) of the Treaty is assumed as soon as the State grants a financial advantage to an undertaking                                 in a liberalised sector where there is, or could be, competition(40).(104)Termoelectrica and Electrocentrale Deva operate in a market for the sale of electricity which is open to competition (recitals                                 35-38). Any economic benefit provided to such undertakings might provide them with an advantage over other competitors not                                 receiving such prices under market conditions. In the case at hand, the support was intended to favour the production of electricity                                 based on coal, which could distort competition between producers of electricity. Furthermore, the Romanian market is now (and                                 was at the time of the facts) interconnected with and exports electricity to other Member States (recital 17).(105)In the light of the above, the Commission concludes that the Contracts might distort competition and might have an effect                                 on trade between Member States within the meaning of Article 107(1) of the Treaty.6.1.5.*Conclusion on the existence of State aid*(106)On account of the arguments described above in recitals 72-105, the Commission concludes that both Contracts involve provision                                 of State aid to Termoelectrica and Electrocentrale Deva within the meaning of Article 107(1) of the Treaty. Romania did not                                 respect the stand-still obligation under Article 108(3) of the Treaty. The State aid is therefore unlawful.6.2.**Compatibility of the aid**(107)Since the measure implemented by Romania for Termoelectrica and Electrocentrale Deva constitutes State aid within the meaning                                 of Article 107(1) of the Treaty, its compatibility must be assessed in the light of the exceptions laid down in paragraphs                                 2 and 3 of that Article.(108)In this case, the aid provided the beneficiaries with current operating revenues, not specifically earmarked for any particular                                 investment that would have been capable of improving production or distribution of electricity. The compatibility with the                                 internal market of operating aid of this kind pursuant to Article 107(2) or (3) of the Treaty has to be restrictively assessed,                                 under strict conditions. The recurrent and long-lasting operating aid involved during two years does not appear to be necessary,                                 nor contribute to any clear objective of common interest of the Union. The proportionality of the aid is not established either.                                 Furthermore and in any event, according to settled case-law of the Court of Justice, it is up to the Member State to invoke                                 possible grounds of compatibility and to demonstrate that the conditions for such compatibility are met(41).(109)The Romanian authorities did not invoke any possible grounds on which the State aid could be considered compatible with the                                 internal market of the State aid and the Commission has not identified any possible grounds for compatibility.(110)In the light of the above, the Commission considers the State aid channelled through the Contracts to be incompatible with                                 the internal market.6.3.**Recovery**(111)According to the Treaty and the Court's established case-law, the Commission is competent to decide that the Member State                                 concerned must abolish or alter aid when it has found that it is incompatible with the internal market.(42) The Court has also consistently held that the obligation on a Member State to abolish aid regarded by the Commission as being                                 incompatible with the internal market is designed to re-establish the previously existing situation.(43) In this context, the Court has established that this objective is attained once the recipient has repaid the amounts granted                                 by way of unlawful aid, thus forfeiting the advantage which it had enjoyed over its competitors on the market, and the situation                                 prior to the payment of the aid is restored(44).(112)In line with the case-law, Article 14(1) of Council Regulation (EC) No 659/1999(45) stated that ‘where negative decisions are taken in cases of unlawful aid, the Commission shall decide that the Member State                                 concerned shall take all necessary measures to recover the aid from the beneficiary [...]’.(113)Thus, given that the State aid in question was not notified to the Commission, in violation of Article 108 of the Treaty and                                 is, therefore, to be considered as unlawful and given that the aid is also incompatible with the internal market, the aid                                 must be recovered in order to re-establish the situation that existed on the market prior to its granting. Recovery should                                 cover the time from when the advantage accrued to the beneficiaries, that is to say when the aid was put at the disposal of                                 the beneficiaries, until ceasing of deliveries end of 2011(46), and the sums to be recovered should bear interest until effective recovery.(114)The recovery amount would be the difference between the annual average of the price at which Hidroelectrica purchased electricity                                 from Termoelectrica and Electrocentrale Deva as set out in recital 32 and the highest prices applied on the market each year                                 for the total quantities supplied by them. This difference is set out in recital 89. Based on price differences applicable                                 on 1 January 2010 and 1 January 2011 throughout the annual period, for purposes of simplification, the resulting amounts to                                 recover are RON 3 656 675 for Electrocentrale Deva and RON 22 619 821 for Termoelectrica. Alternatively, the Romanian authorities                                 may estimate the amounts based on intra-year (e.g. monthly, bi-monthly) actual prices charged to Hidroelectrica(115)Interest shall be added to these amounts, whichever of the two methods to calculate them is used, based on the schedule of                                 actual monthly deliveries of electricity to Hidroelectrica between 2009 and 2011, taking into account the difference with                                 market prices referred to in recital 89.(116)It is furthermore appropriate to examine, in light of the facts of this case, whether the recovery obligation should be extended                                 to or carried out from one or more legal entities other than Termoelectrica and Electrocentrale Deva, by virtue of legal succession                                 or economic continuity with a different undertaking than Termoelectrica and Electrocentrale Deva with which there would be                                 economic continuity, in case they would be unable to meet the recovery obligations. In that respect, the case-law from the                                 EU Courts has identified several criteria which the Commission may take into account, combined or in isolation, in order to                                 determine the economic continuity between two different undertakings(47).6.3.1.*Termoelectrica — economic continuity with CEH*(117)As described in recital 52, Termoelectrica is a company in liquidation. According to well-established case-law, the fact that                                 a company is insolvent and cannot pay back the aid is not a reason to exempt it from recovery. In such cases, the restoration                                 of the previous situation and the elimination of the distortion of competition may, in principle, be achieved by registration                                 of the liability relating to the repayment of the aid in the schedule of liabilities(48). Where the State authorities are unable to recover the full amount of aid, the registration of the liability can meet the                                 recovery obligation only if the insolvency proceedings result the definitive cessation of the undertaking's activities(49). However, where the undertaking which received the unlawful aid is insolvent and a company has been created to continue some                                 of the activities of the insolvent undertaking, the pursuit of those activities may, where the aid concerned is not recovered                                 in its entirety, prolong the distortion of competition brought about by the competitive advantage which that company enjoyed                                 on the market as compared with its competitors. Accordingly, such a newly created company may, if it retains that advantage,                                 be required to repay the aid in question(50). This would for instance be the case if, before the liquidation of the beneficiary of the aid, the assets having benefited                                 from the aid are transferred, as a going concern, to a daughter company created to continue the activity of the beneficiary                                 (economic succession). Moreover, if the beneficiary undertaking is merged with another undertaking, transferring all its rights                                 and obligation to the merged entity, the obligation to repay the aid is also transferred to the latter (legal succession).(118)In the present case, in the absence of recovery of the full amount of aid, which benefitted the activities of Termoelectrica,                                 it is necessary to examine whether there would be economic continuity and/or legal continuity between Termoelectrica and other                                 companies.(119)In respect of economic continuity, as set out in recitals (48 and 51), in September 2011 Termoelectrica created a subsidiary,                                 Electrocentrale Paroseni, to which it transferred (within the same state-owned group) the power plant which actually delivered                                 the purchased quantity of electricity under the Contract with Termoelectrica (recitals 48-65), including all the rights and                                 obligations of Termoelectrica stemming from that Contract, and continued selling electricity to Hidroelectrica under this                                 Contract until October 2011 (when it was merged in CEH). Therefore, Electrocentrale Paroseni took over and continued the activities                                 benefiting of the aid from it mother company Termoelectrica. It should therefore be considered as the economic successor of                                 Termoelectrica.(120)In November 2012, Electrocentrale Paroseni was then merged with Electrocentrale Deva and Electrocentrale Paroseni in the newly                                 created company CEH. Through that merger, CEH took over all the rights and obligations of Electrocentrale Paroseni, which                                 disappeared as a distinct legal entity. It follows that there is legal continuity between Electrocentrale Paroseni, which                                 took over the activities benefitting from the aid, and CEH, within which it was merged on 1 November 2012 and which took over                                 all its rights and obligations.(121)The obligation of recovery of the aid granted to Termoelectrica should therefore be extended to CEH.6.3.2.*Electrocentrale Deva — economic continuity with CEH*(122)As described in recital 51, Electrocentrale Deva, which fully benefitted from the aid as an independent legal entity, though                                 controlled by Termoelectrica, does not exist as an independent entity anymore. However, there is legal continuity between                                 Electrocentrale Deva as legal entity which benefitted of the aid and CEH, within which it was merged on 1 November 2012 and                                 which took over all its rights and obligations.(123)Furthermore, several elements show the existence of economic continuity between Electrocentrale Deva and CEH, for example:                                 (i) further to the merger between Electrocentrale Deva and Electrocentrale Paroseni, the newly created company CEH took over                                 starting both companies from August 2012, along with their operational assets and employees; (ii) the newly created company                                 CEH had electricity generation as its main economic activity in 2012, as did Electrocentrale Deva; (iii) both companies are                                 fully state-owned companies: as shown under recital 50 at the date when the deliveries of electricity under the Contracts                                 ceased, Termoelectica, a fully state-owned enterprise, owned in turn 100 % of Electocentrale Deva and Electrocentrale Paroseni;                                 (iv) the newly created company CEH is also 100 % owned by the state.(124)In light of the above, the legal and economic continuity between, on the one hand, Electrocentrale Deva, Termoelectrica, via                                 Electrocentrale Paroseni and, on the other hand, CEH is established. In that respect, the debt to equity swap based on an                                 independent valuation of the transfer of shares, which preceded the merger of Electrocentrale Deva and Electrocentrale Paroseni                                 within CEH (recital 50), does not interrupt the continuity between the three undertakings concerned. A share deal does not                                 influence the identity of the beneficiary(ies) of the aid, nor the benefits retained from it and transferred irrespective                                 of the identity of the shareholder which, furthermore, in this case happened to be ultimately the Romanian State before 2011                                 and after the merger with CEH. It follows that the recovery obligations vis-à-vis Electrocentrale Deva and Termoelectrica                                 should be extended to CEH.6.3.3.*Conclusion on the recovery*(125)The amount of aid (without interest) to be recovered should be, in principle, RON 3 656 675 for Electrocentrale Deva and RON                                 22 619 821 for Termoelectrica. In light of the legal and economic continuity established between Electrocentrale Deva, Termoelectrica                                 and CEH, the obligation to recover from both beneficiaries should be extended to CEH.

7.**CONCLUSION**(126)The Contracts concluded by Hidroelectrica with Termoelectrica and Electrocentrale Deva contained in years 2010 and 2011 preferential                                 electricity tariffs in favour of latter undertakings. They constituted State aid within the meaning of Article 107(1) of the                                 Treaty. Romania unlawfully implemented that aid, in breach of Article 108(3) of the Treaty. The aid is incompatible with the                                 internal market.

HAS ADOPTED THIS DECISION:

# Article 1U.K.

The State aid amounting, in principle, to RON 3 656 675 for Electrocentrale Deva and RON 22 619 821 for Termoelectrica in                     the form of preferential electricity tariffs in favour of those undertakings, unlawfully granted by Romania in breach of Article                     108(3) of the Treaty, is incompatible with the internal market.                  

# Article 2U.K.

Romania shall recover the incompatible aid referred to in Article 1 from the beneficiaries. The obligation to recover the                     aid is extended to CE Hunedoara.                  

The sums to be recovered shall bear interest from the date on which they were put at the disposal of the beneficiaries until                     their actual recovery.                  

The interest shall be calculated on a compound basis in accordance with Chapter V of Commission Regulation (EC) No 794/2004(51).                  

# Article 3U.K.

Recovery of the aid referred to in Article 1 shall be immediate and effective.

Romania shall ensure that this Decision is implemented within four months following the date of its notification.

# Article 4U.K.

Within two months following notification of this Decision, Romania shall submit the following information:
          -  the total amount (principal and recovery interests) to be recovered from each beneficiary, 
          -  a detailed description of the measures already taken and planned to comply with this Decision, including the proof that it                           registered the recovery order at an appropriate ranking in the liquidation process of Termoelectrica,                         
          -  if it is impossible for by Termoelectrica to fulfil the recovery order, the order made against Termoelectrica to dissolve                           the company and proof that Termoelectrica definitively exits the market,                         
          -  documents demonstrating that the beneficiaries have been ordered to repay the aid. 

Romania shall keep the Commission informed of the progress of the national measures taken to implement this Decision until                     recovery of the aid referred to in Article 1 has been completed. It shall immediately submit, on simple request by the Commission,                     information on the measures already taken and planned to comply with this Decision. It shall also provide detailed information                     concerning the amounts of aid and recovery interest already recovered from the beneficiary.                  

# Article 5U.K.

This Decision is addressed to Romania.

Done at Brussels, 20 April 2015.

*For the Commission*                            

Margrethe Vestager                            

*Member of the Commission*                            

## ANNEXU.K.**ASSESSMENT OF THE ECONOMIC ADVANTAGE — ECONOMETRIC ANALYSIS**

### **Rationale and description of the econometric analysis**U.K.

The econometric analysis undertaken by the Commission aims at creating benchmark prices for the contracts under investigation,                     which would result from a regression analysis carried out on contracts in the dataset, which are not under investigation,                     by using features of these contracts. In a first step, the regression analysis allows constructing a benchmark price as a                     function of the contract characteristics of the dataset (‘in-sample predictions’). In a second step, the results of the regression                     analysis are used to predict a benchmark price for the contracts investigated taking into account their contract characteristics                     (‘out-of-sample predictions’). In the regression analysis, the variation in prices among the contracts in the dataset is explained                     using the following characteristics: quantity purchased and year dummies(52).                  

The econometric analysis relies on the principle that there are a number of drivers of prices, such as quantities. It would                     be misleading to compare the prices across different contracts without considering these drivers. The rationale of this quantitative                     exercise is, therefore that, once some external factors are taken into account, the prices across different contracts become                     more comparable. In the absence of normalisation, only perfectly identical contracts could be meaningfully compared.                  

This empirical exercise does not aim at estimating a causal relationship between prices and some external factors. For example,                     estimating a causal relationship between some factors and the prices would require dealing with the risk of endogeneity, that                     is, the risk that a causal variable (e.g. the quantities) is itself influenced by the explained variable (e.g. the price),                     due to omitted variables or simultaneity bias. The purpose of the quantitative exercise is to ‘normalise’ the prices across                     different contracts to make them more comparable to each other. This normalisation is necessary in the absence of perfectly                     identical contracts and supply characteristics.                  

The regression analysis captures the main features of the bilateral contracts at stake:
          -  including the quantity variable in the regression captures that prices are in general lower when quantities purchased are                           higher(53),                         
          -  including year dummies captures the time dimension and the possible change in market conditions between different years. 

As regards the first step of the empirical analysis, the results of the regression analysis on the dataset contracts are reported                     in Table 1 below.                  

As regards the second step of the empirical analysis, the Commission has identified a benchmark for every year and then tested                     the position of the contracts relative to this benchmark in order to conclude whether the prices charged by Hidroelectrica                     were lower or higher than the modelled benchmark price. The following steps describe in detail the methodology used to determine                     the benchmark:                  
          -  Firstly, for each contract under investigation, it is calculated if and how far the actual price every year departs from its                           corresponding benchmark price computed using the regression and the contract characteristics;                         
          -  Secondly, the most-upward-diverging contract (‘MUD’) is identified(54); this is the dataset contract with the observed price which departs the most above its own corresponding benchmark price                           (in absolute terms). The choice of MUD which provides a range of variation above the central estimate of benchmark price,                           whilst being conservative, is justified; firstly, the econometric model does not explain 100 % of the observed price in the                           dataset and the price benchmark single estimate is provided within an interval of confidence and a margin of error above or                           below the estimate; secondly, price deviations from a single possible price exist on the real market; the MUD, which stems                           from market-based contracts (see recitals 42 to 45) brings quantified information about the possible extent of such deviations                           and provides a market-based range around the calculated benchmark price;                         
          -  Thirdly, the price difference from the MUD contract is used to separate observed prices above benchmark price from contracts                           below benchmark price:                                      -  if a contract has an observed price above its corresponding benchmark price and if the price difference of this contract is                                 higher than the MUD price difference(55), then this contract is considered *prima facie* not market conform,                               
            -  otherwise the contract should be deemed to be market conform; 

The table below presents detailed results from the regression analysis on the dataset. The regression explains 36 % of the                     variations in the data. The coefficient estimates presented in the table below are used in a second stage to predict the ‘benchmark’                     price for the contracts under investigation (out-of-sample predictions), assuming they would also be retail contracts, like                     contracts in the dataset.                  

### **Results of the econometric analysis**U.K.

#### *Table 1*

**Regression analysis**

The following tables present the results of the empirical analysis which uses the regression analysis detailed in Table 1                     when, for each year, the MUD is selected on the basis of the difference in price levels (in RON/MWh) between each contract’s                     estimated price and its corresponding observed price. Tables 2 and 3 below present the differences between Hidroelectrica’s                     contractual purchase prices per each of the years (i.e.: 2009-2011) vis-à-vis the simulated price benchmark for the two companies                     under investigation.                  

In 2009, the MUD contract, that is the contract in the dataset with the highest difference between the observed price and                     its corresponding estimated price, has a price difference estimated at 69,73 RON/MWh. None of the two contracts between Hidroelectrica                     and Termoelectrica and Electrocentrale Deva has an observed price above their estimated price with a price difference larger                     than 69,73 RON/MWh (see Table 2).                  

In 2010, the MUD contract has a price difference estimated at 45,36 RON/MWh. Both contracts between Hidroelectrica and Termoelectrica                     and Electrocentrale Deva have an observed price above their estimated price with a price difference larger than 45,36 RON/MWh,                     that is a difference of 53,05 RON/MWh for the contract with Termoelectrica and 51,37 RON/MWh for the contract with Electrocentrale                     Deva (see Table 2).                  

In 2011, the MUD contract has a price difference estimated at 30,12 RON/MWh. The two contracts between Hidroelectrica and                     Termoelectrica and respectively between Hidroelectrica and Electrocentrale Deva have an observed price above their estimated                     price with a price difference larger than 30,12 RON/MWh, that is a difference of 38,62 RON/MWh for the contract with Termoelectrica                     and 32,64 RON/MWh for the contract with Electrocentrale Deva (see Table 2).                  

#### *Table 2*

**Analysis of contracts in the relevant period 2009-2011**

The results above show that the prices paid by Hidroelectrica to both Termoelectrica and Electrocentrale Deva in 2010 and                     2011 are above a reasonable benchmark determined by the dataset contracts. However, this comparison is made between retail                     contracts (all contracts in the dataset) and wholesale contracts between Hidroelectrica and Electrocentrale Deva and Termoelectrica.                     In other words, the simulated benchmark prices include retailing costs which the two contracts did not incur and, therefore,                     the simulated benchmark prices are higher than corresponding wholesale prices. In order to capture this difference, it is                     therefore indispensable to deduce a retail margin of 5 % from the absolute value of the MUD(56). The results are shown in the table below and further confirm prices above a market benchmark in 2010 and 2011 for the two                     suppliers:                  

#### *Table 3*

**Analysis of contracts by applying a 5 % retail margin reduction for the relevant period 2009-2011**

In conclusion, the econometric analysis indicates contract prices for Termoelectrica and Electrocentrale Deva above market                     prices. However, given the wide interval of uncertainty which is not captured by the model, the conclusion of the econometric                     analysis needs to be complemented with additional economic information on market-conformity of Hidroelectrica's behaviour                     and/or other contract data.                  

1

Commission Decision C (2012) 2552 final of 25 April 2012 concerning the case SA.33475, p. 46

2

OJ C 395, 20.12.2012, p. 46.                           

3

Regulation No 1 of 15 April 1958 determining the languages to be used by the European Economic Community (OJ 17, 6.10.1958, p. 385/58).                           

4

All members of Hidroelectrica's Board of Directors except the General Director of Hidroelectrica and the representative of                              Fondul Proprietatea (2010), cumulated other functions in various Ministries and were appointed through Orders issued by the                              Ministry of Economy and Trade, as follows: (i) in 2005-2006: the personal adviser in the Cabinet of Minister of Economy and                              Trade; the director of cabinet of the Minister for Small and Medium Enterprises; the pe For Electrocentrale Deva: Addendum                              No 1 dated rsonal adviser in the cabinet of the Minister in the Ministry of Public Finance and the personal adviser in the                              General Secretariat of the Government were members of Hidroelectrica's Board of Directors; (ii) in 2007-2008 — situation unknown;                              (iii) in 2009: the State Secretary in the Ministry of Economy and Trade was also the President of Hidroelectrica's Board of                              Directors (2009), while another State Secretary in the Ministry of Public Finance and two general directors in the Ministry                              of Economy and Trade were also members of Hidroelectrica's Board of Directors; (iv) in 2010: three personal advisers of the                              Ministry of Economy and Trade, a State Secretary in the Ministry of Finance and a General Director in the Ministry of Economy                              and Trade were members of Hidroelectrica's Board of Directors.                           

5

Decision of Tribunal of Bucharest No 22456/3/2012 dated 26 June 2012.

6

Decision of Tribunal of Bucharest No 6482 dated 26 June 2013.

7

Energy Regulator, *Annual Report 2009,* p. 15.                           

8

Energy Regulator, *Annual Report 2011,* p. 15.                           

9

For instance, coal mines supplying Termoelectrica, such as the Paroseni mine, were included in the plan for aid to the definitive                              closure of uncompetitive coal mines in Romania which the Commission cleared by Decision of 22 February 2012 in case SA 33                              033 — National Hard Coal Company.                           

10

Energy Regulator, *Annual Report 2010*, p. 12                           

11

Energy Regulator, *Annual Report 2011*, p. 22.                           

12

Deliveries started in 2009.

13

The contract with Termoelectrica was terminated on 29 August 2012, while the contract with Electrocentrale Deva was terminated                              on 30 August 2012.                           

14

On 1 August 2013, Societatea Națională a Huilei, which resulted from the spin-off from Compania Nationala a Huilei allegedly                              competitive mines, was also incorporated into Complexul Energetic Hunedoara.                           

15

Article 25 of the Contract with Electrocentrale Deva

16

Group 4 CET Paroseni — the estimative contractual quantity for the entire contractual duration is of 940 GWh per year).

17

Addendum 1 from 22 March 2009 sets the price at 225 RON/MWh for year 2009; Addendum 2 unknown date sets the price at 225 RON/MWh                              for year 2009 and stipulates that the price from 2010 onwards for the entire contractual duration shall be established by                              ANRE; Addendum 3 from 7 August 2009 sets the price at 230 RON/MWh for 2009; Addendum 4 from 19 February 2010 sets the price                              at 230 RON/MWh for the period 1 January-31 March 2010; Addendum 5 from 30 March 2010 sets the price at 230 RON/MWh for the                              period 1 April-31 December 2010; Addendum 6 from 31 December 2010 sets the same price as in Addendum No 5 (at 230 RON/MWh                              until 31 January 2011); Addendum 7 from 1 February 2011 sets the price at 235 RON/MWh for the period 1 February-31 December                              2011; Addendum No 8 from 22 September 2011 replaces the initial Supplier Termoelectrica in the original contract by SC de                              Producere a Energieie Electrice si Termice Electrocentrale Paroseni SA.                           

18

See Article 14 of the contract with Electrocentrale Deva.

19

Initial contractual price is 220,56 RON/MWh. Addendum 1 from 1 August 2009 sets the price at 234 RON/MWh for year 2009; Addendum                              2 from 2 January 2010 sets the price at 225,7 RON/MWh for the period 1 January-30 June 2010.; Addendum 3 from 11 February                              2010 sets the price at 234 RON/MWh for the period 1 January-31 March 2010; Addendum 4 from 1 April 2010 sets the price at                              234 RON/MWh for the period 1 April-31 December 2010; Addendum 5 from 1 February 2011 sets the price at 234 RON/MWh for the                              period 1 February-31 December 2011.                           

20

For Termoelectrica: Addendum No 1, dated 20 March 2009, stipulated the price for 2009 based on ANRE Decision; Addendum No                              2 dated 1 June 2009 sets the price for 2009 and specifies that from 2010 onwards the contractual price shall be set by ANRE                              for Paroseni Plant.                           

For Electrocentrale Deva: Through Addendum No 2, dated 7 January 2009, the price was adjusted based on ANRE Decision.

21

For Termoelectrica: Addendum No 3 dated 1 August 2009 refers to the Note No II/11096/31.7.2009 approved by the State Secretary                              in the Ministry of Economy and Trade sets the price for the year 2009; Addendum No 4 dated 11 February 2010 refers to the                              Note No II/11672/11.2.2010 approved by the Minister of Economy and Trade, sets the price for the period 1 January-31 March                              2010; Addendum No 5 dated 1 April 2010 refers to the Note No II/11877/29.3.2010 approved by the Minister of Economy and Trade,                              sets the price for the period 1 April-31 December 2010; Addendum No 6 dated 1 January 2011 refers to the same Note No II/11877/29.3.2010                              approved by the Minister of Economy and Trade and maintains the price for the period 1 January-31 December 2011; Addendum                              No 7 dated 1 February 2011 refers to the Note No 6547/21.1.2011 approved by the Minister of Economy and Trade and sets the                              price for the period 1 February-31 December 2011.                           

For Electrocentrale Deva: Addendum No 1 dated 1 August 2009 refers to the Note No II/11096/31.7.2009 approved by the State                              Secretary in the Ministry of Economy and Trade sets the price for the year 2009; Addendum No 3 dated 11 February 2010 refers                              to the Note No II/11674/11.2.2010 approved by the Minister of Economy and Trade sets the price for the period 1 January-31                              March 2010; Addendum No 4 dated 1 April 2010 refers to the Note No II/11878/29.3.2010 approved by the Minister of Economy                              and Trade sets the price for the period 1 April-31 December 2010; Addendum No 5 dated 1 February 2011 refers to the Note No                              6547/21.1.2011 approved by the Minister of Economy and Trade and sets the price for the period 1 February-31 December 2011.                           

22

According to Romania's submission of information dated 11 September 2013 and 20 February 2015, electricity deliveries ceased                              at the end of 2011 under the Contracts. Thus, no deliveries were made in 2012.                           

23

Administrated by OPCOM only as of July 2011.

24

Commission Decision of 5 March 2014, in application of Article 102 of the Treaty imposing fines pursuant to Article 7 of Council                              Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and                              82 of the Treaty (OJ L 1, 4.1.2003, p. 1) in case AT.39 984 ‘Romanian Power Exchange/OPCOM’.                           

25

The dataset included the following information: the identity of the seller and the buyer, the type of contract, date of entry                              into force, date of expiration, as well as the quantity, profile of supply and the weighted average price for each year from                              2009 to 2011.                           

26

Commission Decisions of 25 April 2012 C(2012) 2516 final concerning the case SA.33623 (OJ C 189, 29.6.2012, p. 3), C(2012) 2517 final concerning the case SA.33624 (OJ C 268, 5.9.2012, p. 21), C(2012) 2542 final concerning the case SA.33451 (OJ C 395, 20.12.2012, p. 5) and C(2012) 2556 final concerning the case SA.33581 (OJ C 395, 20.12.2012, p. 34).                           

27

Romania's submission of information dated 3 September 2014.

28

Romania's submission of information dated 20 February 2015.

29

Published in the Official Gazette No 700 from 4 October 2011.

30

Liquidation approved through the General Assembly Decision dated 12 March 2012.

31

See footnote 27.

32

Available in Romanian only at http://www.euroinsol.eu/uploads/Raport%2059%20Hidro%20v11.pdf — p. 213.

33

Romania's submission of information dated 11 September 2013.

34

See Annex 1 to Romania's submission of information dated 11 September 2013.

35

For the Contract with Termoelectrica.

36

For the Contract with Electrocentrale Deva.

37

See, e.g., Case C-305/89 *Italy* v *Commission* (‘*Alfa Romeo*’) [1991] ECR I-1603, paragraphs 18 and 19; Case T-16/96 *Cityflyer Express* v *Commission* [1998] ECR II-757, paragraph 51; Joined Cases T-129/95, T-2/96 and T-97/96 *Neue Maxhütte Stahlwerke and Lech-Stahlwerke* v *Commission* [1999] ECR II-17, paragraph 104; Joined Cases T-268/08 and T-281/08 *Land Burgenland and Austria* v *Commission* [2012] ECR II-0000, paragraph 48.                           

38

The report issued by Hidroelectrica's judicial administrator — http://www.euroinsol.eu/uploads/Raport%2059%20Hidro%20v11.pdf                              — available only in Romanian — p. 212.                           

39

Case C-482/99 *French Republic* v *Commission (Stardust Marine)* [2002] ECR I-4397.                           

40

*Alzetta*, paragraphs 141 to 147; *Altmark Trans*.                           

41

Case C-364/90, Italy v Commission, [1993] ECR I-2097, paragraph 20.

42

See Case C-70/72 *Commission* v *Germany* [1973] ECR 813, paragraph 13.                           

43

See Joined Cases C-278/92, C-279/92 and C-280/92 *Spain* v *Commission* [1994] ECR I-4103, paragraph 75.                           

44

See Case C-75/97 *Belgium* v *Commission* [1999] ECR I-030671 paragraphs 64 and 65.                           

45

Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC                              Treaty (OJ L 83, 27.3.1999, p. 1).                           

46

The electricity deliveries stopped before termination of the Contracts by Hidroelectrica's judicial administrator end of August                              2012.                           

47

T-123/09 *Ryanair* v *Commission*, EU:T2012:164, points 155-156, T-415/05, T416/05 and T-423/05, *Hellenic Republic, Olimpiakes Aerogrammes AE and Olimpiaki Aeroporia AE* v *Commission*, EU:T:2010:386, point 135 and C-287/12 P, *Ryanair Ltd* v *Commission*, EU:C2013:395, points 101 to 107.                           

48

Case 277/00 *SMI* [2004] ECR I-4355, paragraph 85; Case 52/84 *Commission* v *Belgium* [1986] ECR 89, para. 14; Case C-142/87 *Tubemeuse* [1990] ECR I-959, paragraphs 60–62.                           

49

Case C-610/10 *Commission* v *Spain* (‘Magefesa’) (ECLI:EU:C:2012:781), paragraph 104 and the case-law cited.                           

50

Case C-610/10 *Commission* v *Spain* (‘Magefesa’) paragraph 106.                           

51

Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 laying down detailed                              rules for the application of Article 93 of the EC Treaty, OJ L 140, 30.4.2004, p. 1, with further amendments.                           

52

The variables contract duration and buyer off-take profile defined in the dataset are not included since they are not statistically                              significant.                           

53

A preliminary treatment of the data discarded three annual data on contracts corresponding to the intra-group sales of ALRO                              from 2009 to 2011, as they are likely to reflect different market conditions than those prevailing in bilateral contract negotiations                              between a supplier and an independent buyer, which is the focus in this case.                           

54

The regression is made on 137 observations of individual contract data in the period 2009-2011.

55

The initial MUD for year 2011 corresponds to intra-group sales of OMV Petrom. Since such intra-group sales, like Alro's (see                              footnote 2) are likely to reflect different market conditions than those prevailing in bilateral contract negotiations between                              a supplier and an independent buyer, which is the focus in this case, the following MUD is used instead.                           

56

Based on median value of trader's margin in Romania, KPMG Report for Energy Holdings, May 2014, Appendix 3 p. 53,