Romania’s opposition Social Democratic party drafted and is promoting a bill for capping the energy (electricity, natural gas) prices at the past six months’ average.

The losses incurred by the suppliers will be covered by the Government from a fund financed from energy producers’ profits (50% of their net profits) and from the central government budget, explains PSD deputy president Mihai Tudose, Economica.net reported.

This would be a temporary fix until the Government sets in place a more sustainable framework for protecting the households.

The Parliament has just enacted the so-called “vulnerable consumer bill” aimed at supporting low-income households, but the schema was seen as fragile as the Government itself is now discussing some more realistic subsidies for households hacked with high energy prices.

Speaking of the supportability of the current energy prices in Romania, it is more the expected further hikes that create panic since, at this moment, the end-user prices have increased less than the wages over a three-year perspective (since the latest energy price shock).

The natural gas price at the BRM commodity exchange in Bucharest rose from RON 220 per MWh in August to RON 250-290 in September.

The prices set under the forward contracts indicate RON 307 per MWh in October and RON 317 per MWh in November (Aleph).

Similarly, the electricity price on the spot market has tripled as of August compared to the same period last year - while the end-user price has advanced by only 18%.

The surging energy prices on the spot markets all over Europe put massive pressures accumulated by the suppliers - while the Governments attempt to mitigate (or smooth) the impact on the end-users. 

(Photo: Aitor Muñoz Muñoz | Dreamstime.com)

andrei@romania-insider.com