The Romanian Government approved the Emergency Ordinance on the regulation of the country’s energy market which introduces a centralized mechanism for the purchase of electricity and caps the selling price of electricity at 92 euros/MWh between 1 January 2023 and 31 March 2025.
The statement from the Government saud that the mechanism for the centralized purchase of electricity is intended to mitigate direct effects of the increase in energy prices on the economy by capping revenues of electricity producers. The sole purchaser of electricity will be national gas and electricity market operator OPCOM.
These measures are necessary so that the electricity prices paid by final customers do not aggravate the level of energy poverty and do not lead to a blockage of economic activities at the national level, bearing in mind that it is imperative to ensure a rigorous discipline of the energy market and a high level of protection of citizens in their capacity as consumers.
The centralized procurement mechanism applies to producers whose output totals an installed capacity greater than or equal to 10 MW, to electricity suppliers who have contracts with end customers, electricity transmission operators and electricity distribution operators. The mechanism does not apply to economic operators, producers of electricity from renewable energy sources, to electricity production capacities put into operation after 1 April, as well as producers with electricity and heat production capacities in cogeneration which delivers thermal energy to the centralized thermal energy supply system.
Minister of Energy Virgil Popescu said that the capped sale price is one that ensures the development of further investment by companies and allows further development of new electricity production capacities. He added that the Government will also amend an existing energy prices capping scheme according to consumption to make households, companies and large industrial consumers which exceed monthly consumption of 255 kWh pay 0.27 euros/kWh and not the market price, as before.
In September, the Romanian Government announced it has extended the scheme capping energy prices for households and some small companies by five months, until the end of August 2023. Under the scheme, households with monthly consumption lower than 100kWh pay 0.14 euros/ kWh and those with monthly consumption between 100kWh and 255 kWh pay 0.16 euros/ kWh. Small and medium-sized companies will pay 0.2 euros/kWh.
It is not clear if this scheme will too be extended until 2025. Earlier this week, Prime Minister Niculae Ciuca said that the “cap and subsidy” scheme will most likely be extended by another year.