Gov't passes memorandum on phased cuts in electricity prices

The Romanian government on Thursday passed a memorandum of measures designed to reform the local energy market in the short term, in order to have fair prices for final users, which includes phased cuts in electricity prices and the development of a mature, functional energy market.

The measures are aimed at: operationalisation of the Market Maker mechanism - the selection of an operator to ensure liquidity in the energy market, by stimulating supply and demand, facilitating long-term transactions and thus causing a constant decrease in price; extending guarantee mechanisms for energy transactions carried out on the wholesale market; optimising the costs of purchasing energy for own technological consumption; dynamic/differentiated pricing and massive implementation of smart metering; consistency in terms of energy efficiency in the economic, public and residential sectors, agerpres reports.

"We are talking about an extensive process of discussions, negotiations, carried out in the last two months, through which we have searched together with the regulatory authority, together with employers associations of producers, suppliers, distributors, together with the Romanian Government, a way to find a set of measures that are agreeable for everyone, in a form in which to lead to a cut the price to the final user. That is the governmental formula we arrived at two months ago, precisely at the moment when the capping and offset scheme for electricity prices in Romania came to an end, on July 1, which led to the final users, whether we are talking about individuals or companies, facing energy prices even tice as higher as they used to pay," Ivan said at the end of a government meeting.

He said that in Romania there are 3.7 million household consumption places, which, if until July had a consumption of around 100 kWh and an estimated price of RON 70 on each bill, with the elimination of this electricity price capping scheme, given the market prices, they ended up paying even double bills.

In the memorandum, Romania has three months to operationalise the Market Maker mechanism.

"With this mechanism, which has already been implemented by ANRE and we are now working on fine tuning, once we started these discussions, we have established very clearly that part of the measures are by order of the regulator, part are primary and secondary legislation, which are in charge of the Ministry of Energy. We have reached the situation where, for acquisitions longer than six months, each company, each trader will come with guarantees of at least 10%, and for those under six months of 5%, which will automatically lead to the limitation of these slippages that have taken place in Romania, which have created huge gauging profits for certain companies and which, in the end, led to the end user having to foot artificially high prices."

According to the minister, a mechanism has been created under which, in the next three months, together with the market operators, the single buyer principle is created, which will lead to a cut in the final technological cost of losses on the network, of the electricity transmission and supply operator, which will automatically lead to a decrease in the prices to be paid by the final users.

At the same time, Ivan said that an extremely important role is played by a mechanism that works successfully in other European Union member states, namely dynamic tariffs, implemented at national level, and smart metering.

"I'll give you a very simple example, between 10:00hrs and 18:00hrs there should be a tariff of up to RON 0.80 per kilowatt hour, and after 18:00hrs it should be RON 1.30-1.40, capped to avoid everything that means gouging. For this mechanism, in order to secure additional support from the state, I have already prepared an application that I will send by September 9 to the European Investment Bank, through which we will use as a source the fund for modernisation, for the creation of these integrated IT platforms, which will start this digitalisation in Romania's national energy system and which will automatically lead to the estimates made by the specialists and experts who worked in the working group to a cut of about 24% in the final cost of electricity once this mechanism is implemented," the official also said.