According to a response sent by Brussels to a request from HotNews.ro, the European Commission has drawn attention to a scheme to limit the compensation of electricity and natural gas bills in Romania. This is in conditions when prices across Europe are at the level before the energy crisis, and our country is the only one that still provides subsidies. In addition, governments can only set regulated prices below costs for firms until December 31, 2023. Now the authorities in Brussels are trying to understand why the government in Bucharest wants to keep the scheme until 2025.

HotNews.ro asked the European Commission whether it is in line with European law to keep the energy compensation cap scheme in Romania, given that the energy crisis is over and prices have fallen, but the Bucharest government is keeping subsidies until April 1, 2025. .

“The commission is analyzing the problem and is in contact with the Romanian authorities to better understand the scheme. As a general principle, the price interventions of the member states must comply with the rules of the EU energy market,” answered the representative of the Commission.

During the crisis, Council Regulation (EU) 2022/1854 allowed member states to extend regulated prices to SMEs and introduce regulated prices below cost under certain conditions: non-discrimination between suppliers and fair compensation to suppliers.

This option expired on December 31, 2023, and only normal free market rules apply at this time.

“Given the exceptional nature of the measures provided for in this order and the necessity of their application, in particular, in the winter period of 2022-2023, this order should be valid until December 31, 2023,” the order states.

Under what conditions can subsidies be provided in the market

In addition, Member States may introduce regulated electricity prices based on Article 5 of the Electricity Directive, which is a derogation from the general principle of market prices for supply.

There are different requirements for schemes targeting vulnerable and energy-poor consumers compared to general schemes covering all households.

For schemes targeting all households, the main requirements are that prices are higher than costs and that there is effective competition in the market. In all cases, the schemes must be reasonable, proportionate and limited in time.

In relation to retail gas prices, Article 3 of the Gas Directive allows Member States to impose public service obligations on companies for the benefit of domestic and non-domestic customers, but also under certain market conditions and not as each government wants.

In any case, decisions of this kind must be notified to Brussels within one month of the implementation of the schemes.

In addition, the Commission assesses whether the scheme meets the requirements of Article 5 of the Electricity Directive and Article 3 of the Gas Directive and takes action if necessary.

If it is proven that Romania has violated European legislation, our country may end up in front of the European Court and pay fines.

Romania paid energy suppliers 23 billion lei from the state budget

Romania is the only country that currently provides subsidies. Other states had targeted measures — not for everyone like here — that were completed last year.

Recently, HotNews wrote that Romania did not inform the European Commission about subsidies given to companies.

For Romanian consumers, the prices paid in invoices are limited, and the difference is covered by the state budget.

So far, 23 billion lei have been paid to suppliers from these differences, starting from autumn 2021.

The government is considering amending the legislation on price restrictions

Last week, the Ministry of Energy announced that it is analyzing ways to amend GEO 27/2022 (regarding price caps).

“We’re trying to lower the bills even more,” profile minister Sebastien Bourduilla said last Thursday when asked about energy and gas prices.

“It is possible to go below this ceiling, we are conducting a technical analysis and we will come up with possible adjustments to GEO 27/2022. (…) Romanians will pay less, the maximum ceilings remain unchanged. (.. .) We are looking at whether it is somehow possible to achieve an even greater drop in prices,” the minister said.

When asked why he wanted to change the legislation now, after repeatedly saying he would not change it, Bourdouya replied succinctly: “Stability is also a merit.”

Just days before, he said the restrictions would not be changed until April 1, 2025, so as not to disrupt the ISP billing system.

“We have publicly expressed our desire to leave the scheme as it is, as it has two benefits. For consumers – ordinary people and companies in Romania – this scheme meant stability and predictability in how you build a business plan or how you shape your family budget,” Burduja told Euronews Romania.

“The second big advantage is that it ensured the stability of the energy market. The supplier, the moment we start playing with this scheme and walking on thresholds, should update all their IT systems, all their accounting systems. It takes a few months, and if you do it in a hurry, as it has unfortunately happened in the past, it leads to errors, it leads to incorrect accounts with many zeros, news, and we don’t want that.

In any case, suppliers feel the pressure, because money from the state budget has been coming quite hard. Adding costs to them with various scheme adjustments from time to time is not a very good idea.”

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