The Romanian Energy Suppliers Association – AFEER requests the authorities to urgently start preparations for the re-liberalization of electricity and natural gas prices, in order to avoid creating chaos in the market and give the economy and the population the opportunity to re-adapt timely.
“The global crises, which started with the coronavirus pandemic – health, economic, energy and geo-political – led the Romanian authorities to take exceptional measures. In the energy field, these measures had the effect of capping/compensating electricity and natural gas bills The legislation in this sense applies until March 31, 2025. Which means that, in just a few months, this restriction in the energy sector will be lifted. In order not to create chaos in the market, we ask the authorities to start preparations regarding the re-liberalization of prices electricity and natural gas, so that it runs smoothly, giving the opportunity to the economy, but also to the people, to re-adapt. Only in this way will we all be able to benefit from fair prices for energy and gas,” said Laurentiu Urluescu , the president of AFERR, quoted in a press release of the association.
According to the legislation, domestic and industrial consumers benefit from electricity at prices of a maximum of 1,300 lei/MWh, which include all components (grid tariffs, green certificates, cogeneration bonus, excise taxes, VAT). The ceiling/compensation of invoices from the state budget is carried out in two stages: in the first stage, suppliers pay from their own money to producers, transporters, distributors and the state budget (VAT and excise duties) the difference between the final price paid by consumers and the market price. In the second stage, suppliers are reimbursed from the budget the amounts spent for the Romanian state, AFEER representatives explain.
“All these provisions create additional concerns for suppliers! On the one hand, we have unpaid amounts since last year, and on the other GEO 32/2024 sets at 700 lei/MWh the maximum value of the weighted average price of electricity at which ANRE calculates the amounts to be settled from the state budget; an artificial ceiling introduced without a correct analysis of the price volatility in the market. In addition, we fear that the Solidarity Fund and the Energy Transition Fund, which was fueled by overcharging producers when prices were very high and from which the reimbursements have been made so far, will no longer be fed enough to settle the amounts spent by the suppliers to support the capping/compensation schemes introduced by the authorities recover in time the amounts with which the suppliers support the consumer aid scheme,” stresses the president of AFEER.
The suppliers also indicate that, currently, due to the weather conditions, with red heat codes, the consumption of electricity has reached very high levels, not only in Romania, but in the whole area, which has led to an increase in prices on the spot markets . The prolongation of this situation may have effects on consumer invoices, on suppliers and on the state budget, through the application of the legislation on the capping/compensation of invoices.
They specify, at the same time, that they do not transmit any kind of offers on the balancing market, they only transmit the forecasted consumption to the operator of this market.
“I want to clarify that the suppliers have no role in the transactions with balancing products on the balancing market; they are not providers of balancing services on this market, they do not transmit any kind of offers. Only the operator of the balancing market trades on this market, respectively Transelectrica S.A., some of the electricity producers and holders of qualified storage capacities. The suppliers only transmit the forecasted consumptions to the operator of this market and finally settle the costs with the balancing of the system. According to the most recent data published by Transelectrica, the energy traded on the balancing market decreased, for example, in March 2024, as a percentage of total consumption, compared to 3.7% in the same month of 2023. In terms of volume, the decrease is from 172 GWh to 142 MWh 20% shows that there was a significant improvement in the forecasts of all market participants. Worryingly, although the volume decreased, the prices paid increased from an average of approximately 400 lei/MWh in 2023 to over 2,000 lei/MWh in 2024, with maximums exceeding 15,000 lei/MWh. Thus, although their forecasts had a higher degree of accuracy this year, the suppliers are the ones who bear the losses caused by the exorbitant price increases. The causes of these price increases on the balancing market must be clarified by the authorities together with the electricity producers participating in this market and with Transelectrica,” also said Laurentiu Urluescu, according to Agerpres.
On the other hand, AFEER requests the creation of a market for guarantees of origin, just as it exists in other EU countries. Producers, say the representatives of the association, at least the renewable ones, could recover their investments, by establishing a voluntary market of guarantees of origin, considering the growing demand due to the expansion of ESG policies of industrial final consumers. ESG (Environmental, Social and Governance) represents the application of sustainable business practices in the context of Environmental, Social and Governance criteria, which are also recognized internationally.
ANRE issues a guarantee of origin for each megawatt hour produced from renewable energy sources. In Romania, at present, these guarantees of origin are transferred by the supplier, to his final customer, at his request, together with the electricity sold. The supplier cannot transfer only the guarantee of origin to a final customer, without supplying him with the electricity related to it, they explain.
“If a consumer does not, for now, need guarantees of origin, they are lost. Basically, they are issued for nothing! On the other hand, other consumers, who need such guarantees, cannot purchase them. We draw attention to the fact that, although there are increasing demand, the current method of transfer is inefficient and causes bottlenecks and shortages. That is why we call for the creation of a functional market for these guarantees of origin, so that they can be transferred independently of electricity, just as it exists in other countries in EU,” pointed out Urluescu.
Established in 2006, AFEER currently includes a number of 44 members, suppliers and traders licensed and active on the electricity and/or natural gas market, which ensure the supply of energy both to private consumers and SMEs -s and consumers from all categories of economic agents operating in Romania, with a market share of about 85% of the final consumption of electricity and 85% of the final consumption of natural gas.