The price of electricity on the spot market of the Bucharest Stock Exchange was 67% lower in December 2023 than in the same period of the previous year, according to a report by the exchange operator OPCOM. However, the Government is not changing the level of limits in the consumer support scheme in order not to disrupt the billing systems of suppliers, says Sebastian Bourduya, the relevant minister.

The average energy price on the next-day market (spot market) of the local OPCOM exchange was 402 lei per MWh in December, down from 1,219 lei per MWh in December 2022.

Compared to the previous month, November 2023, when energy cost 507 lei/MWh, the price in December was even lower (by 20%).

This is only the price of raw materials. For end users, there is an additional charge for transmission and distribution, grid input and extraction, and supply, which varies from company to company.

For household consumers, the prices paid in bills are limited by the state until March 2025.

Those with low consumption, up to 100 MWh, pay a maximum of 0.68 lei/kWh. Those consuming between 100 and 255 kWh pay up to 0.8 kWh, while those above 255 kWh reach 1.3 lei per kWh.

The difference between these limits and the actual price is covered from the state budget.

So far, €23 billion has been paid out to suppliers in these disputes, starting in the fall of 2021.

What will the change in marginal prices mean?

Although the price on the exchange is much lower, the authorities say that they will not change the thresholds of the limit, so as not to disrupt the billing systems of the providers.

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

“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. This work takes several months, and if it is done 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 do not 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.”

The minister also talked about the phased abolition of these ceilings:

“We want to keep the scheme as long as we are allowed from European level, March 2025 under the current legislation, so that we can go through next winter, after which of course we will see depending on the market. conditions, how we can phase out the compensation/cap scheme, how we can continue to protect the vulnerable so that the impact is as minimal as possible.”

We must start talking about returning to the free market

But discussions about how to lift restrictions and return to the free market should begin this year, even if it is an election year.

Otherwise, consumers are in for a shock, George Niculescu, president of ANRE, said in November.

Since the decision is political, the government has the option of choosing between two situations: either openly talk about the free market and prepare people, or remain silent and leave consumers unaware.

“Obviously, the process of leaving the scheme should be such as not to cause shocks in the market. It is very important that we hold discussions with market participants the day before, so that – what is very important – consumers do not feel any shock,” said the NARE representative.

He showed that we are in a period where Romania is rapidly installing new production facilities, which in a free market should cause prices to fall without government intervention.

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