Prices for the sale of electricity and natural gas by producers have decreased, and for end consumers, the current limits have been preserved until March 2025. This, very briefly, is the effect of the Resolution adopted on Wednesday by the Government., which changes the price cap compensation scheme. However, the new regulated price for electricity producers of 400 lei/MWh does not correspond to the market reality, as it is significantly higher than average levels.

The free price could be lower than the regulated price / The producer, but also the state, benefits from a higher price

Energy Minister Sebastien Bourduilla says producer prices have dropped to bring them in line with market prices, which have fallen significantly recently. “We have asked to adjust the scheme so that it reflects the reality of falling prices in the market,” the minister said.

But the manufacturer’s new price also does not correspond to the market price. If we analyze the evolution of electricity prices in European markets, including Romania, we will notice that they are significantly lower even than the new regulated price. Thus, if the price were left free, the producer’s level could be significantly lower than 80 EUR/MWh.

Producers and the state will benefit from a higher regulated price. The largest producers Hidroelectrica, Nuclearelectrica, CE Oltenia are state-owned companies. The higher their profit, the more money comes to the budget through dividends. In 2023, Hidroelectrica received a record profit of 6.3 billion lei, which it will fully distribute to shareholders through dividends.

We are strictly referring to spot market prices, which, depending on their change, may also affect end-user bills, both domestic and non-domestic. On this aspect, the minister says that the market prices have come down, so the manufacturer’s ceiling has also been reduced and further the effects will be felt in lower invoices.

The manufacturer’s new price is 80 EUR/MWh, and the average market price is below 70 EUR.

More precisely, the emergency resolution provides for a reduction in the price at which the producer sells electricity from 450 lei (90 euros)/MWh to 400 lei (80 euros)/MWh, and gas – from 150 lei (30 euros)/MWh hours up to 120 lei (24 euros)/MWh. These are the prices at which producers will be able to sell without excessive taxation. Anything above these levels is taxed at 100%.

If the price of gas is consistent with the market price, the same cannot be said about electricity. Average day-ahead (PZU) market prices in February were €70/MWh, in line with prices in the region, according to data from stock exchange OPCOM.

In March, there is a downward trend in prices on the spot market, often reaching an average daily value of 60 EUR/MWh. On Thursday, the average price for PZU was EUR 45/MWh. In most European markets, the average figure was around 50 EUR/MWh, in France – 17 EUR/MWh, and in Spain and Portugal – 1 EUR/MWh.

Burduha: Prices are very low in Spain and Portugal because there is a warehouse there

The energy minister says that Spain and Portugal have very low prices because they produce a lot of green energy and have large storage facilities.

“There are many elements in Spain and Portugal that we don’t have yet. We do not have such a large production of green energy, we do not have storage capacities due to pumped storage. You can produce cheap solar and wind energy, but if you have Tarnița-Lăpușteşti, you manage to store this energy for several hours,” praised the minister.

He claims that Transelectrica data shows we need 4,000 MW of storage capacity, half of which is in hydroelectric storage, such as the Tarnița-Lăpuștești project, which is currently in the tender stage for a new feasibility study.

This statement was made after HotNews.ro wrote that Spain and Portugal are selling energy for 1 euro/MWh and Romania for 69 lei/MWh.

Minister: NARE has made calculations / If corrections are needed, we will make them

Asked why the price of the electricity producer was set above market prices and whether new changes would be made if they were to decrease, Minister Sebastián Bourduilla said on Thursday that the calculations were made by the National Energy Regulatory Authority (ANRE).

“These limits of 400 lei were determined by ANRE’s extensive analysis. If adjustments are necessary, we will make them then,” said the minister.

In connection with this topic, two days ago, the minister did not rule out the possibility of making new adjustments in the event of a further drop in market prices. “We proposed to set these limits by a government decision to have some flexibility to adapt according to the market,” Burduza said when asked what the authorities would do if prices fell further from current levels.