Romanian utilities warn new power supply support scheme could stall markets

Romanian utilities warn new power supply support scheme could stall markets

Turbines at a wind farm near Cernavoda, southeast Romania, on May 8, 2014. REUTERS/Bogdan Cristel

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BUCHAREST, Sep 2 (Reuters) – A new support scheme approved by the Romanian government to protect households and small businesses from skyrocketing electricity bills risks blocking the country’s gas and electricity markets, energy companies said Friday.

On Thursday, the government extended the support scheme until the end of August 2023, capping natural gas and electricity bills for households, small businesses, hospitals and schools to a certain monthly consumption level and compensating suppliers for the difference. read more

But the decree, which was approved without public consultation, also imposes an additional revenue tax on producers and traders and limits the electricity purchase prices for which suppliers can be compensated.

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The Association of Romanian Energy Companies (ACUE) said that the marginal cut-back price does not take into account current market prices, violates national and European Union law, and will result in significant losses among suppliers.

“ACUE is asking for a review of the new changes to avoid a total market lockdown,” the statement said. “The situation is critical and … directly affects the continuity of supply and distribution services.”

Speaking at the Black Sea Security Forum Thursday, executives at Romanian gas and electricity supplier Engie and gas producer OMV Petrom said they were still reviewing the decree to assess the financial implications.

“I am afraid that this decree will have unexpected and undesirable consequences,” said the head of Engie Romania, Eric Stub.

“We are in an extremely difficult situation, it is not easy to take well thought out measures, we are confident that they will have the desired effect.”

OMV Petrom’s director of public relations and regulation, Alexandru Maximescu, said “it’s very important to consult with the industry before making very important decisions like this decree.”

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Reporting by Louise Ilie; Editing by Sandra Mahler

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