Romania will give up on the regulated electricity tariffs in stages for both industrial users and individuals, and will cancel from 2013 the social tariff for poor families, according to Mediafax, quoting an agreement between the Romanian Government and the International Monetary Fund (IMF). This will affect up to 1.4 million consumers who qualify for the social tariffs, from a broader group of 8.3 million electricity consumers.

Individual consumers unable to pay their bills after tariffs are liberalized will be grouped into three categories, based on their household income. The social tariff will be canceled in three stages, between 2013 and 2015. By 2015, Romanians will no longer get social tariffs for the electricity they use, but the state plans to offer financial aid to those with a net income lower than the average salary, which is currently RON 700 in Romania.

Overall, prices for electricity will go up by 10 percent in July 2013 and similar increases will be applied over two semesters, from 2014.

In a previous meeting with the IMF, the EU and the World Bank, Romania's Government agreed to introduce a mandatory clause for suppliers who apply regulated prices to buy a certain quota of the electricity supplied to consumers on the open market. The weight of this quota will gradually increase. A certain amount of the final price paid by consumers who benefit from regulated tariffs will reflect the cost of electricity on the open market. The scenario would decrease the financial risk for suppliers, as the quota which reflects the market price will be revisable each quarter, and would avoid significant, rapid increases in price for the final consumers.

According to the agreed document, this formula allows Romania to stop, suspend and even revert to an earlier stage in the process of increasing prices if consumers cannot pay or if the local electricity market is distorted.

In Romania the final price paid by electricity consumers is regulated by the National Authority for Energy Regulation (ANRE), for social protection issues. The European Commission and the IMF have asked Romania to liberalize prices for energy, raising them to EU levels.

Liberalization of gas prices is also expected to start next year in Romania.

editor@romania-insider.com