How much would electricity and gas bills rise if subsidies were removed

2023-09-01 13:31:00

The electricity and gas bills paid by Romanians are currently capped and subsidized by the state budget through a law that allows this until the spring of 2025. However, as the authorities prepare to take measures to reduce the budget deficit, a the idea of ​​giving up these subsidies also appeared.

Electricity billPhoto: Tommaso79 / Dreamstime.com

Hotnews looked at what companies have on the open market for September, and the news is bad: they’re all more than 11% higher than the cap prices.

Alex B., a household consumer from Bucharest, consumed 110 kWh in the last month and paid 74.81 lei to his supplier, Enel Energie Muntenia, i.e. a capped price of 0.68 lei per MWh.

According to the price comparator on the website of the National Energy Regulatory Authority, the cheapest offer on the market is now Hidroelectrica’s (0.76 lei per MWh), 11% more than the capped price. The offer is valid until September 30, 2023.

The next offer is from Nova Power and Gas, 24% more expensive, followed by those of Renovatio, Hermes Energy, Ingka Investments (74% more), E.ON, Electrocarbon, Elsid (80% more) and Enel , CEZ, Electrica, Engie, with 91% more. The list continues with a number of 65 offers, the most expensive being from Cyeb SRL, respectively 1,356 lei per kWh (1,700% more than the capped price).

Higher gas bills too

The news is not better for gas bills either, especially for those who live in mountainous areas and consume more. As an example, I chose an invoice of 662 lei from Adriana C. from Brașov, who used 2,921 kWh in March (the last month with high consumption).

According to the price comparator, the cheapest offer from September 1 is from E.ON, with 30% more, followed by CEZ, Enel, Electrica, Nova Power and Gas (41-42% more) and Engie (123% Furthermore). Another 20 offers follow, the largest being from the MVM Energy company (with 2,500% more).

The offers in the price comparator vary according to the geographical area of ​​the consumers, but also according to the type of contract they opt for, with or without a subscription.

Current legislation allows energy and gas consumers to switch from one supplier to another at any time within a maximum of 21 days at no additional cost.

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The price of energy is rising again on the stock market

Starting from November 2021, when the state instituted the first version of the price cap scheme, state subsidies for electricity and gas bills amounted to 18.7 billion lei.

In the rush of the authorities to find solutions to reduce budget expenses, the possibility of waiving these ceilings also appeared. Especially since, on the stock market, the price of energy is lower than in the same period last year. More precisely, in July 2023, the average price on the spot market of the OPCOM energy exchange was 73% lower than in July 2022.

But, even if in the first half of this year, the price on the stock exchange was continuously decreasing, it started to increase again in July, by 13% compared to June.

The solution: phasing out subsidies

According to the Intelligent Energy Association, one solution could be the gradual elimination of subsidies.

“In conclusion, a possible decision to remove the gas price cap must be taken at least 6 months in advance, followed by a calendar for removing the cap/compensation, so as not to end up in a situation where consumers suffer more than if this aid scheme had not been introduced and would not determine a way to create conjunctural excess profits for suppliers”, said Dumitru Chisăliță, the president of the association, according to a press release.

Photo source: Dreamstime.com

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