Energy Minister Virgil Popescu announced on Wednesday the mechanism for offsetting electricity and gas bills. He said that for gas, bills will be reduced by 25% and for electricity a reduction calculated as the difference between the average market price and the lowest price in the competitive market will be applied.
In the first reading we came up with the draft emergency ordinance for household consumer compensation. We had a meeting with SME representatives, because we are also preparing an aid scheme for SMEs.
We presented the energy and gas compensation scheme for household consumers.
For electricity, we started from the idea that in the competitive market we have a minimum offer, a minimum reference price, i.e. the price offered by a company that is lower than the regulated price on 31 December 2020. So we are talking about a competitive price that is lower than the regulated price at the end of the regulatory period. We have a minimum baseline. And we have an average price in the market of about 0.82 lei per kilowatt.
So we have 2 benchmarks: the lowest price in the competitive market, 0.64 lei, and the average price in the competitive market, 0.82 lei.
This difference of 0.18 lei per kw to the consumer will be fully subsidized by the state from the state budget.
We have several consumer bands:
We have consumers between 30 kW and 200 kW. Why is there a 30 kW threshold? Because it means that there we have unoccupied houses or holiday homes and there is no point in subsidizing them.
Over 200 kw is no longer average consumption, it’s high consumption, we’re not talking about middle-income people.
Basically, between 30 kw and 200 kW, we are talking about 5,172,193 households. If we multiply this by the statistics from the Ministry of Labor, which show that there are 2.5 people per household, we are talking about almost 13 million Romanians who will benefit from this aid for electricity.
Who will not benefit apart from those under 30 kW of consumption? Vulnerable consumers, to whom the law on vulnerable consumers will apply. Those under 30 kW and those who are vulnerable will not benefit from the effects of this ordinance, but will go to the law of the vulnerable consumer and will receive this subsidy from there.
At the end of each month, the suppliers will issue the bills, they will put this differentiated discount on the bill, they will draw up some automatic slips from the computer systems which they will present in their tax returns and they will be deducted directly.
For gas, we have taken a reference price more than double last year, 255 lei per kilowatt as a reference price. There I have another tranche of consumption.
We have from 100 to 300 cubic meters annual consumption.
Between 100 and 300 cubic meters we are talking about a studio apartment, between 300 and 600 cubic meters we are talking about a 2-bedroom apartment, between 600 and 900 we are talking about a 3-bedroom apartment, between 900 and 1100 cubic meters we are talking about a 4-bedroom apartment up to 100 square meters and between 1100 and 1200 cubic meters we are talking about dwellings, individual houses up to 120 square meters.
All these types of dwellings where Romanians with incomes up to the average range live will benefit from a fixed percentage aid of 25% of the invoice value.
For natural gas we are talking about 25% fixed amount depending on consumption, applied at the end of the bill, and reverse 25% of the invoice value with VAT.
This average price reference for both gas and electricity can be updated according to market developments by joint order of the ministers plus the energy regulator.
The Minister also gave an example for the electricity bill. “The bill for a consumption of 100 kilowatts, at 0.82 lei per kilowatt, is 82 lei, including VAT. On this bill, 0.18 lei will be subtracted and multiplied by 100 kW. On 100 kw the bill amount would be 64 lei, which is what consumers would have to pay if they were with the supplier with the lowest price on the market,” the minister explained.