Report on the use of revenues from capacity allocation interconnection between 1 January 2023 and 31 December 2023

Report on the use of revenues from capacity allocation interconnection between 1 January 2023 and 31 December 2023 In accordance with the provisions of Art. 19 para. (2) and (3) of Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity, revenues resulting from the allocation of interconnection capacity shall be used by the transmission system operator for the following purposes: a) guaranteeing the actual availability of the allocated capacity, including firmness compensation; b) maintaining or increasing cross-zonal capacities by optimising the use of existing interconnectors through coordinated remedial action, where appropriate, or covering costs arising from network investments relevant to reducing congestion of interconnectors; c) if the objectives related to the priorities set out in points (a) and (b) have been adequately achieved, those revenues may be used as revenues to be taken into account by regulatory authorities when approving the methodology for calculating network tariffs or setting network tariffs, or both;. The residual revenues shall be placed on a separate internal account of the transmission system operator until such time as it can be spent for those purposes. Also, according to the provisions of Art. 9 para. (1) of Council Regulation (EU) 2022/1854 of 6 October 2022 on emergency response to address high energy prices, by way of derogation from Union rules on congestion revenues resulting from the allocation of cross-zonal capacity (revenues from allocation of cross-border interconnection capacities), Member States may use the excess revenues to finance measures to support final energy customers Electrical. Under Article 10(4)(b) of that regulation, those measures to support final customers may consist in using excess revenues from the allocation of cross-border interconnection capacities to reduce network tariffs. The Romanian transmission system operator, CNTEE Transelectrica S.A., is responsible for managing congestion revenues resulting from the allocation of interconnection capacity between Romania and Serbia, Hungary, Bulgaria, Ukraine and Moldova. Every year, CNTEE Transelectrica S.A. submits to ANRE the monitoring of the use of revenues obtained from the allocation of interconnection capacities on borders. The mentioned revenues, realized between 1 January 2023 and 31 December 2023, are presented separately by months and by borders, in Table no. 1. The analysis of the amounts collected indicates that approx. 34.24% of revenues come from the allocation of capacity for export, approx. 47.76% of revenues come from capacity allocation for import and 17.99% from the Flow-Based Market Coupling mechanism on the Romania-Hungary border. The distribution by borders indicates that ca. 50,48 % of revenues shall come from capacity allocated on the border with Hungary, 42,65 % from capacity allocation on the border with Bulgaria, 6,13 % from capacity allocation on the border with Serbia, 0,25 % of capacity allocation on the border with Ukraine and 0,49 % of revenues from capacity allocation on the border with the Republic of Moldova. -1- At the beginning of 2023, CNTEE Transelectrica S.A. had deposited in the dedicated account the amount of 180,501,945 lei (of which 163,619,697 lei represents the component related to the borders with EU member states, and 16,882,248 lei represents the component related to the borders with non- EU member states). The aforementioned amount of 180,501,945 lei resulted as a result of the correction in 2023 of the value of the total balance at the end of 2022 of 168,006,436 lei, which was found in the ANRE report for 2022, as follows: - for the expenses incurred in 2021 for the 400kV OHL Cernavoda – Stalpu project, the operator received as an advance the amount of EUR 8,012,902.4 representing non-reimbursable external funds, considered at that time at the NBR exchange rate of 31.12.2021 of lei 4.9481/EUR. The amount of expenditure related to revenues from capacity allocation was calculated as the difference between the value of works and the value financed from EU funds. It was corrected in 2023, at the time of submission of the reimbursement application no. 3 European funds for this project, by recalculating at EU indications the amount of 8,012,902.4 Euro representing non-reimbursable external funds using the average exchange rate of the European Central Bank, of 4.9285 lei/Euro. Thus, in 2023, an increase in expenses related to allocation revenues of 2021 resulted in the amount of 156,763 lei; - the change in the legal reserve for 2022 as a result of reaching the legal maximum ceiling of the reserve fund in 2022, resulting in the allocation for 2022 of a lower percentage of the company's gross profit compared to the standard percentage, namely 1,227% compared to 5%. During the period between January 1, 2023 and December 31, 2023, CNTEE Transelectrica S.A. recorded congestion revenues totaling 343,177,653 lei. Of this amount, 319,607,021 lei represent revenues obtained at borders with EU Member States. In accordance with the provisions of Art. 9 para. (2) and (3) of Regulation (EU) 2022/1854, congestion revenues amounting to 90,162,436 lei were used in the calculation of the regulated revenue on the basis of which the transmission tariffs applicable in 2023 were established, of which 66,591,814 lei from the revenue component from the allocation of interconnection capacities obtained on borders with EU states. In accordance with the provisions of the applicable national legislation, the resulting revenues are found within the annual gross result obtained by the company and it is distributed by destination, in accordance with the provisions of Government Ordinance no. 64/2001 on profit distribution to national companies, national companies and companies with full or majority state capital, as well as to autonomous companies, as amended. In 2023, it was not necessary to retain a legal reserve, given that the operator reached the legal maximum ceiling of the reserve fund in 2022. Thus, after applying the 16% corporate tax, the amount remaining and deposited between January 1, 2023 and December 31, 2023 in the special account intended was 212,532,783 lei. Between January 1, 2023 and December 31, 2023, the amount of 40,952,655 lei was used to maintain or increase the existing interconnection capacities. This amount was used for projects provided for in the National Development Plan for the period 2022-2031, classified in the category of projects "F - -2- Increase of interconnection capacity", according to the detailed situation by projects in table no. 2, column corresponding to 2023.  Positions 2 to 4 of Table 2 are projects part of the Mid Continental East Corridor group of projects, included in the TYNDP European Plan (project code 144); the projects were included in the list of projects of common interest approved by Commission Delegated Regulation (EU) 2022/564 of 19.11.2021 amending Regulation (EU) No 347/2013 of the European Parliament and of the Council as regards the list of projects common interest of the Union (project code 3.22); these are projects in the category "Increase of interconnection capacity" (with codes F.1 to F.3 of the National Development Plan for the period 2022-2031). These projects contribute to the following European priority objectives: - increasing the transfer capacity on the East-West corridor in South-East and Central Europe (RO- >SB: 844MW, RO->HU: 335MW, SB->RO: 600MW, HU->RO: 617MW). Increasing cross-border transfer capacity allows European countries to exchange more energy, with implications for reducing price differences between EU countries; - removing congestion and integrating the RES into the European network. Increasing the transfer capacity on the East-West corridor of South-Eastern and Central Europe will lead to supporting a large- scale integration of RES technologies in the South-West of Romania and North-East Serbia.  Positions 5 to 9 of Table no. 2 are projects within the Black Sea Corridor group of projects, included in the TYNDP European plan (project code 138), are included in the list of projects of common interest approved by Commission Delegated Regulation (EU) 2020/389 of 31.10.2019 amending Regulation (EU) no. 347/2013 of the European Parliament and of the Council as regards the Union list of projects of common interest (project code 3.8); these are projects in the category "Increasing interconnection capacity" (with codes F.4-F.8 within the National Development Plan for the period 2022-2031). These projects contribute to the following European priority objectives: - increasing the North-South transfer capacity on the border between Romania and Bulgaria, with implications for reducing price differences between EU countries (RO->BG: 600MW; BG->RO: 600MW); - congestion removal and integration of the RES into the European network. Increasing the transfer capacity in the predominantly North-South direction at the border between Romania and Bulgaria will lead to supporting a large-scale integration of RES technologies in the Black Sea coast area, in both countries and especially Romania.  Position 10 of table no. 2 is a project in the category "Increasing interconnection capacity" (code F.9 of the National Development Plan for the period 2022-2031), which contributes to increasing the transfer capacity on the Romania-Moldova border. This project, together from the picture. 11, contributes to increasing the transfer capacity on the border between Romania and the Republic of Moldova (RO->MD: 350MW; MD->RO: 350MW). -3- Out of the total amount used, the amount of 40,830,799 lei was used to achieve the priority objectives set out in Article 19 para. (2) of Regulation (EU) 943/2019, i.e. investments to increase interconnection capacity on borders with EU countries set out in headings 2 to 9. At the end of 2023, at the disposal of CNTEE Transelectrica S.A. remained the amount of 352,082,073 lei deposited in the dedicated account, broken down according to the table below: on borders January 1, 2023 – December 31, 2023 TOTAL UE non-UE Initial balance 163.619.697 16.882.248 180.501.945 Revenues from the allocation of interconnection 319.607.021 23.570.622 343.177.653 capacity, showing separately: - Revenue used in the calculation of the transport 66.591.814 23.570.622 90.162.436 tariff - Revenue to be distributed 253.015.218 - 253.015.218 - Tax 16% 40.482.435 - 40.482.435 - Income paid into a separate account 212.532.783 - 212.532.783 Payments made 40.830.799 121.856 40.952.655 Final balance = Initial balance + Revenue paid – 335.321.681 16.760.392 352.082.073 Payments made The total revenues transferred to the separate account between January 1, 2013 and December 31, 2023, after applying the corporate income tax and the legal reserve, are 1,007,721,665 lei, of which 889,389,594 lei represents the component of income obtained at EU borders. From the total revenues transferred to the separate account, between January 1, 2013 and December 31, 2023, the total amount of 655,639,593 lei was used, of which 554,067,914 lei to finance investments dedicated to reducing congestion on the borders with EU states, according to the breakdown by year and projects presented in Table no. 2. For 2023, ANRE issued Decision no. 2322/21.12.2022 approving the expenses for 2023 from the revenues for allocating interconnection capacity. The expenditure forecast by this decision and the expenditure incurred are shown in Table No. 3. -4-  Table No. 1 –Gross revenues obtained from the allocation of interconnection capacities on borders (lei) Total January February March April May June July August September October November December 2023 Romania - 1.288.381 994.028 918.341 1.532.986 770.934 840.079 1.040.458 984.926 1091.518 1454.288 1.616.297 1.782.262 14.314.498 Borders with EU countries Bulgaria Bulgaria - 14.045.789 12.902.997 10.519.347 9.615.224 9.709.198 10.072.214 10.879.754 10.508.182 10.778.221 10.276.097 10.839.510 11.904.940 132.051.473 Romania Romania - 9.729.366 9.252.965 5.855.741 5.816.100 6.635.870 5.467.858 8.113.940 6.763.796 5.697.546 6.145.616 6.119.669 7.279.689 82.878.157 Ungaria Ungaria - 2.640.585 2.622.104 2.162.027 2.044.825 2.095.084 1.867.699 1.898.680 2.701.405 2.193.268 2.779.073 3.126.942 2.491.648 28.623.340 Romania RO-HU 9.420.971 7.645.897 4.071.837 8.396.083 320.280 8.164.083 2.120.695 2.581.778 1.616.212 3.566.875 8.103.672 5.731.171 61.739.553 FB MC Romania - 4.847.698 1.378.104 1.434.640 1.599.191 1.185.363 1.134.020 1.206.449 1.128.128 1.316.668 1.330.881 1.259.425 1.400.508 19.221.076 Serbia Borders with non-EU countries Serbia - 160.430 173.883 193.528 222.724 153.008 124.211 138.173 112.570 127.313 136.308 125.532 136.614 1.804.294 Romania Romania - - - - - - - - - - - 150.605 622.705 773.309 Ucraina Ucraina - - - - - - - - - - - 84.143 - 84.143 Romania Romania - - - 7 - 28.621 270.411 527 12.333 - - 60 15.875 327.834 Moldova Moldova - - - - 449.966 144.581 - - - 618.069 136.923 10.437 - 1.359.976 Romania TOTAL 42.133.220 34.969.978 25.155.470 29.677.098 21.042.940 27.940.576 25.398.677 24.793.118 23.438.814 25.826.060 31.436.292 31.365.412 343.177.653 -5-  Table no. 2 – Revenue used from 1 January 2013 to 31 December 2023 Nr. 2013- Crt. Project name 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2023 LEA 400 kV interconnection Reşiţa (România) 1 - Pancevo (Serbia) 356.936 4.018.228 34.716.516 21.361.325 26.138.958 13.185.905 30.850 - (4.201.871) (709.695)2) - 94.897.153 Stage I: LEA 400kV s.c. Porțile de Fier - (Anina) - 2