The government insisted on maintaining the limits on electricity and natural gas as they were set in the spring of 2022, at the height of the energy crisis, although it was clear that their level no longer had anything to do with the price evolution of the previous year. period. In the international spot markets, gas and electricity prices were more than ten times lower than the 2022 records. In short, the way the limits, established almost two years ago, are applied, encourages excessive pricing in the producer-supply chain, especially when public authorities such as NARE or the Competition Council are inert in the face of possible market abuses.

While the European markets have normalized, the Romanian electricity and gas markets behave as if we are still experiencing an energy crisis. But it is also not possible to simply abolish the restrictions, even if they are no longer justified, because this can create chaos.

According to HotNews.ro, no one from the government wants to open a discussion about the abolition of the ceilings, because it is too sensitive and difficult a topic. It is possible that the whole problem will be postponed until after the elections and handed over to the next government, with the risk that next year we will wake up with some complex bills.

For electricity, the ceiling is 0.68 lei/kWh, and suppliers’ offers reach 1.43 lei/kWh.

Analyzing the current tariffs on the market, it can be seen that the restrictions set by the Government, which were in effect until March 2025, turned out to be rather indicative prices for future contracts. In the electricity sector, suppliers are putting forward new offers for one-year contracts, even above the limits, according to price comparators.

HotNews.ro analyzed the current offers of suppliers and found that most exceed the ceiling level. For example, if someone from Bucharest wants to conclude a contract now in a competitive market, with a consumption of 100 kWh/month, he will find offers with rates from 0.77 lei/kWh (the cheapest supplier) to 1.43 lei/kWh (the cheapest supplier). the most expensive supplier).

However, the legislation stipulates that suppliers are obliged to bill energy consumption to final consumers with the lowest price between the maximum capped final price, the contractual price and the final price, which is calculated as the sum of the purchase component, the supply component, the components represented by the regulated tariffs for network services and components represented by VAT and excise duties.

Contract prices were very high, especially last year. According to Eurostat, Romania was ranked 3rd in the EU for the highest electricity prices, with an average contract rate of 2 lei/kWh. The cap and compensation scheme appears to be both the most complex and the most expensive in the EU.

The price is capped, in theory, starting with producers other than renewables until 2025. They are obliged to sell through MACEE – a mechanism for the centralized purchase of electricity, at a maximum price of 0.45 lei/kWh (90 EUR/MWh), to which network, transport, distribution tariffs, various taxes and suppliers’ markups are added.

In addition, the price is capped for household consumers at levels ranging from 0.68 lei/kWh for monthly consumption from 0 to 100 kWh inclusive and a maximum of 1.30 lei/kWh for monthly consumption over 300 kWh hours For non-household consumers, the maximum limit is 1 lei/kWh for 85% of the monthly consumption at the point of consumption, the difference in consumption is set at a maximum of 1.3 lei/kWh.

The limits were set by the famous GEO 27/2022, which was repeatedly amended because the government could not find the right form to apply the compensation limitation scheme. In the current state of the market, the right form has not been found.

For gas, the ceiling is 0.31 lei/kWh, and some offers can reach 0.33 lei/kWh.

As for gas, suppliers’ offers for one-year contracts start from 0.31 lei/kWh (the cheapest suppliers, i.e. most of them) up to the maximum amount and can reach 0.33 lei/kWh from the most expensive suppliers. In the case of gas, producers must sell to cover domestic consumption at a capped price of 0.15 lei/kWh (30 EUR/MWh).

Theoretically, the consumer does not directly experience artificially inflated prices. Indirectly, yes. The difference between the average purchase price and the invoice price is borne by the state through compensation to suppliers, that is, ultimately, the consumer. So far, the state has paid more than 23.3 billion lei to electricity and gas suppliers.

Paradox: the current form of the ceilings is already unjustified, but their abolition will create chaos and the bills will be huge compared to the pre-crisis period

If, absurdly, the Government decided to lift the restrictions, household consumers would suddenly pay the contract price. Given that these contracts are valid for one year, if the restrictions were lifted, consumers would be billed at the contract price.

Thus, even if we are no longer in crisis and return to the situation before it, Romanian consumers will pay much higher bills than before the price explosion.

In the electricity sector, in January 2021, one-year contracts could be concluded for 0.25 lei/kWh, i.e. at a price three times lower than the cheapest offer now. What is important is that in January 2021 spot market prices exploded, reaching €300/MWh, in the context of liberalization chaotically managed by ANRE.

For gas, for example, it can be even three times higher. In November 2020, it was possible to conclude a contract with a certain supplier for a period of one year at a price of 0.09368 lei/kWh, including transport services. Another contract, with another supplier, was concluded in January 2021, also for one year, a contract for 0.06 lei / kWh. With this supplier, the contract prices were subsequently adjusted to 0.45 lei/kWh in 2022, and the latest contract price to 0.75 lei/kWh, valid at the level of December 2023.

And in March 2025, the situation will be the same, as there is no sign that the Ministry of Energy, the National Energy Regulatory Authority (ANRE) or the government in general are working to find a solution to phase out the scheme to avoid chaos not being created in the market. Even suppliers are worried about the abolition of the cap-compensation scheme, anticipating a new moment of the energy crisis, but which this time will only affect the Romanian market.

Prices on the exchanges are more than ten times lower, ceilings at the level of the energy crisis

Despite the fact that we are in the middle of winter, when the demand for electricity is higher, the prices in the international spot electricity markets are constantly decreasing, reaching values ​​of 50 EUR / MWh in Germany or 70 EUR in Poland on Monday, which were also before the crisis. Even in Romania, on the OPCOM stock exchange, where, paradoxically, it trades at higher prices than in the West, quotations reached around 80-90 euros / MWh.

Basically, these values ​​show that the market has calmed down, that the EU has come out of the energy crisis. We will remind you that in the summer of 2022, at the peak of the energy crisis, electricity quotations exceeded 550 euros/MWh. Huge, if we talk now about the prices.

Gas prices on the TTF exchange in Amsterdam, a representative of the European market, are constantly decreasing, reaching the level of 26 euros/MWh. A further decrease is expected, with the possibility that in the coming months it will even reach the level of around 15 EUR / MWh, because in 2020, given the large supply, against the background of liquefied gas imports, gas storages are still full, about 75%, we we have already passed the middle of the cold season, and the temperatures are not very low.

On the Romanian BRM gas exchange, gas quotations are higher than European ones, about 29 euros/MWh.

NARE checks suppliers, dust in the eyes

In December, the National Energy Regulatory Authority (ANRE) announced that suppliers had checked their compliance with GEO 27/2022 regarding the cap-and-compensate scheme. The president of ANRE, George Niculescu, even organized a press conference to say that he had fined three large suppliers 18 million lei for not complying with GEO 27/2022, but he did not say who they were.

In fact, the big three suppliers are not even among the most representative in the market. MET Romania Energy, Transenergo Microhidro and MVM Future Technology, reports Focus Energetic.

According to HotNews.ro’s sources, in fact, the notification of these fines was only “dust in the eyes” of much larger cases of non-compliance with the law.

As a reminder, HotNews.ro exclusively wrote a series of articles about the rise in gas and electricity prices, while they are falling on European markets, and about how the state subsidizes the huge profits of suppliers.

HotNews.ro also wrote that ANRE fully controls 6 large electricity suppliers, 3 major gas suppliers, as well as traders. According to the answers sent to HotNews.ro’s request, ANRE noticed that some suppliers reported high values ​​in contracts with end consumers, and the amount of energy was sold consistently in order to increase the price. Companies risk receiving a fine of up to 5% of turnover.

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