Romania: Electricity Distribution Firms Argue “Cap And Subsidy” Scheme Will Generate Losses

Setting a maximum average settlement price for the electricity suppliers is an unconstitutional provision, contrary to European and national legislation, according to the association of the Romanian utility companies, ACUE.

The association wants a review of the scheme to avoid total market blockage and discontinuities in the supply of energy to customers.

ACUE’s statement refers to the maximum price set by the Government under the revised “cap and subsidy” scheme (OUG 119/2022), assumed as the maximum average price paid by the electricity distribution firm and used by the market regulator ANRE in order to calculate the subsidies paid to the electricity distribution firms for keeping the end-user prices at the regulated levels.

“The maximum value of the weighted average price of electricity at which ANRE calculates the amounts to be settled from the state budget for electricity suppliers is RON 1,300 [EUR 260] per MWh,” according to the OUG.

ACUE claims that the Government knows that the purchasing price of electricity is higher these days and that, by the provisions of the ordinance, it generates losses to the electricity distribution firms.

Furthermore, the distribution fees are frozen, ACUE says, stressing that they do not reflect the actual costs that the operators of distribution networks incur.