Division Results of the econometric 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).

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^f1. The results are shown in the table below and further confirm prices above a market benchmark in 2010 and 2011 for the two suppliers:

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.