Keeping cap on electricity price reimbursements delays market rebound, detrimental to customers (employers' assoc)

Keeping cap on electricity price reimbursements delays market rebound, detrimental to customers (employers' assoc).

Keeping in place the cap on electricity cost reimbursements delays the rebound of the market to the detriment of customers, as the measure is discretionary and unconstitutional, the ACUE Federation of Electric Utility Employers' Associations (ACUE) says in a press release, told Agerpres.

"The ACUE Federation is deeply concerned about the decision to keep in place the cap on the cost of suppliers for the purchase of electricity. Ever since the establishment of this cap, ACUE has warned that the decision does not comply with the provisions of the Constitution or the European regulations transposed into national legislation. Furthermore, the immediate effect of establishing a purchase value in a non-transparent way will be reducing electricity transactions in the medium term. The measure unnecessarily makes the market and security of supply vulnerable and will delay the rebound of the local market to the best possible and competitive conditions for customers."

ACUE suggested the decision-makers to scrap the reimbursement cap and the National Energy Regulatory Authority (ANRE) to create a transparent formula for calculating the reference price, based on existing contracts, allocated quantities and the average price on the spot market, as a viable solution that reflects market realities, while being predictable and transparent for suppliers and customers alike.

"The immediate impact of establishing an average purchase price ungrounded in a transparent calculation formula - which would ensure a correct way of evaluating the real costs and, implicitly, the developments in the energy market - will be reducing energy transactions in the medium and long run. Suppliers will have to limit their transactions; there is a risk that in the future the government/Parliament will come back with a price setting that is non-transparent and unsustainable, and the purchases made will be, by default, losses. Giving the context, the measure makes customers vulnerable by negatively affecting the supply of safe energy at the best possible prices. The best solution is a transparent computation formula that correctly reflects market developments," Daniela Daraban, executive director of ACUE, a federation that represents large energy suppliers with a portfolio of approximately 9 million clients, is quoted as saying in the release.

ACUE also argues that the decision of Parliament discourages long-term contracts - the allocations established by the MACE centralised electricity purchase mechanism, under which suppliers can purchase electricity at the price of 450 lei/kWh, do not cover all the needs for consumers. Suppliers have to buy the rest of the energy from the market to cover the customers' demand. Considering the possibility that the price may vary above the new cap set in place for the reimbursement, it means that the suppliers have to again bear losses.

ACUE is said to promote the development of the Romanian energy industry and the competitiveness of the Romanian economy by promoting the benefits of the free market, fair competition practices and mechanisms that contribute to the proper functioning of Romania's electricity and natural gas markets. ACUE has 23 members, including important electricity and natural gas groups, with a total number of 22,500 staff and an annual turnover of over EUR 5.5 billion.