Electricity

Romania caps energy prices, rolls out windfall tax for electricity producers

Romania caps energy prices windfall tax for electricity producers

Photo: Ariananistor35 from Pixabay

Published

October 30, 2021

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Published:

October 30, 2021

Country:

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Almost all members of the lower house of the Parliament of Romania voted for a bill limiting the prices of gas and electricity for households and small businesses and introducing support for a range of other categories of consumers. Electricity producers with the exception of power plants that run on fossil fuels will pay a tax on revenues from prices higher than EUR 91 per MWh.

Creating a system to shield households and small firms from the energy crisis impact took a long time, but Romania eventually managed to pass a comprehensive law for measures that will apply until March 31. President Klaus Iohannis signed the bill adopted by parliament in an almost unanimous vote.

Among other sources, the government will finance the support from a special 80% tax on power producers’ revenue from prices above EUR 91 per MWh. Power plants running on fossil fuels including cogeneration are exempted. Spain recently introduced a similar measure.

Eligible households to pay 13.7 to 20.2 euro cents per kilowatt-hour

Households would benefit from the compensation of up to 5.9 euro cents per kilowatt-hour which their electricity suppliers would receive from the government. The maximum consumption eligible for subsidies is 1.5 MWh, divided over the billing periods from November through March, though increases of up to 10% per month will be tolerated, the law stipulates. It translates to 9.93 kWh per day or 10.92 kWh per day, respectively.

It means a household won’t get any support if its consumption is higher than 327.6 kWh in a billing period of 30 days.

The lowest possible final price that consumers will pay including all charges and the value-added tax was set at 13.7 eurocents per kilowatt-hour, while the price before subsidy is capped at 20.2 cents per kilowatt-hour. Households are eligible for support if they consume at least 1 kWh per day of the billing period.

Greece is also limiting the impact of the energy crisis on households by subsidizing electricity and gas suppliers. Bulgaria only granted aid for companies for electricity.

Household gas users get 33% cut in fuel component in bills

Romania will pay up to 33% of the natural gas price component of household customer bills. Beneficiaries have a maximum consumption limit of 1,000 cubic meters of natural gas split into monthly installments (also with a 10% tolerance), at 10.6 kWh per cubic meter.

The lowest price is EUR 25.3 per MWh excluding VAT and surcharges. The tariff cannot exceed EUR 50.5 per MWh, or EUR 74.8 per MWh together with other costs. The minimum consumption is 7 kWh per day.

In case the gas bills for municipal units are higher than EUR 50.5 per MWh, the central government will cover 50% of the difference.

Special support was introduced for vulnerable consumers for both electricity and gas including a delay for payment. Small, medium-sized and micro enterprises, entrepreneurs and family businesses are exempted from a range of tariffs and excise duties.

Electricity and natural gas prices are capped for five months for households, hospitals, non-governmental organizations, religious institutions and social services.

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