President Klaus Iohannis promulgates the law on energy price caps and bill compensation / How the measures apply – case studies

contor, energie electrica, curent Sursa foto: Parlamentul European

President Klaus Iohannis on Thursday promulgated the law for capping energy prices and for bill compensation in the 2021-2022 cold season, the Presidential Administration said. The law is to apply from the 1st of November.

Here is a summary of the measures. The reductions will be applied directly to bills.

Offsetting bills for household customers – electricity

Household customers will benefit from a unitary compensation of up to 0.291 lei/kWh for electricity from November 1 2021 to March  31, 2022.

The maximum consumption limit for the compensation to be granted is 1,500 kWh electricity, allocated in monthly instalments. A consumption deviation in favor of the recipient of the compensation of maximum 10% is accepted.

The final amount of the compensation may not reduce the customer’s final price below 0.68 lei/kWh including all charges.

In order to receive the compensation, the electricity consumption of household customers during the billing period may not be less than 1 kWh per day.

Example of the calculation of the compensation granted:

Example 1

Billing on 25.11.2021
Billing period 25.10 – 24.11.2021
Unit value of compensation 0.291 lei/kWh

Case 1
Invoice period consumption 190 kWh
The compensation period is 01 – 24.11.2021 (24 days)
Reference consumption: 10.92 kWh/day x 24 days = 262.08 kWh/billing period
Minimum consumption: 1 kWh/day
Minimum consumption during the billing period: 1 kWh x 24 days = 24 kWh.
Consumption for the compensation period 6.12 kWh/day x 24 days = 146.88 kWh (where 6.12 kWh/day is the daily consumption for the billing period = 190 kWh/31 days)
The condition is checked: Minimum consumption < Consumption for the period of application of the compensation ≤ Reference consumption
Condition is met: 24 kWh < 146.88 kWh < 262.08 kWh
Maximum amount of compensation granted 146.88 kWh x 0.291 lei/kWh = 42.74 lei
The final amount of compensation cannot reduce the final customer price below 0.68 lei/kWh including all charges.

Case 2
Billing period consumption = 350 kWh
The period of application of the compensation is 01- 24.11.2021 (24 days)
Reference consumption: 10.92 kWh/day x 24 days = 262.08 kWh/billing period
Minimum consumption: 1 kWh/day
Minimum consumption during the billing period: 1 kWh x 24 days = 24 kWh.
Consumption for the compensation period 11.29 kWh/day x 24 days = 270.96 kWh (where 11.29 kWh/day is the daily consumption for the billing period = 350 kWh/31 days)
The condition is checked: Minimum consumption < Consumption for the period of application of the compensation ≤ Reference consumption
Condition not met: 24 kWh < 270.96 kWh > 262.08 kWh
Value of compensation granted = 0 lei

Example 2
Invoice issued on 20.02.2022
Billing period 10.01 – 19.02.2022
Unit value of compensation 0.291 lei/kWh

Case 1
Consumption for the billing period: 220 kWh
The compensation period is 10.01 – 19.02.2022 (41 days)
Reference consumption: 10.92 kWh/day x 41 days = 447.72 kWh/billing period
Minimum consumption: 1 kWh/day
Minimum consumption in billing period: 1 kWh x 41 days = 41 kWh
Consumption for the compensation period 5.37 kWh/day x 41 days = 220 kWh (where 5.37 kWh/day is the daily consumption for the billing period = 220 kWh/41 days)
The condition is checked: Minimum consumption < Consumption for the period of application of the compensation ≤ Reference consumption
Condition is met: 41 kWh < 220 kWh < 447.72 kWh
Maximum amount of compensation granted 220 kWh x 0.291 lei/kWh = 64.02 lei
The final amount of compensation cannot reduce the final customer price below 0.68 lei/kWh including all charges.

Case 2
Consumption for the billing period: 500 kWh
The period of application of the compensation is 10.01- 19.02.2022 (41 days)
Reference consumption: 10.92 kWh/day x 41 days = 447.72 kWh/billing period
Minimum consumption: 1 kWh/day
Minimum consumption in billing period: 1 kWh x 41 days = 41 kWh
Consumption for the compensation period 12.19 kWh/day x 41 days = 500 kWh (where 12.19 kWh/day is the daily consumption for the billing period = 500 kWh/41 days)
The condition is checked: Minimum consumption < Consumption for the period of application of the compensation ≤ Reference consumption
Condition not met: 41 kWh < 500 kWh > 447.72 kWh
Value of compensation granted = 0 lei

Compensation of household bills – natural gas

Household customers will be entitled to a unitary compensation in the period from 1 November 2021 to 31 March 2022 in the amount of up to 33% of the value of the natural gas price component of the beneficiary customer’s supply contract.

The maximum consumption limit for the compensation to be granted is the kWh equivalent of 1000 m3 of natural gas at a factor of
conversion factor of 10,6 kWh per m3, allocated in monthly instalments. A consumption deviation in favor of the beneficiary of the compensation of maximum 10% is accepted.

The compensation applies to household customers who have gas supply contracts with a gas price higher than the reference price of 125 lei/MWh taken into account under the compensation scheme. If, as a result of the application of the compensation, the difference between the gas price in the contract and the compensation amount is less than 125 lei/MWh, only the difference between the gas price and the reference price shall be compensated.

In order to qualify for compensation, the gas consumption of household customers in the billing period may not be less than 7 kWh per day.

Example of the calculation of the compensation granted:

Example 1
The natural gas price in the contract is 145 lei/MWh
The reference gas price is 125 lei/MWh.
The amount of compensation determined as 33% is 145 lei/MWh x 33% = 47.85 lei/MWh
The value taken into account for compensation by reference to the 33% percentage is 145 lei/MWh – 47.85 lei/MWh = 97.15 lei/MWh
Amount of compensation granted: Gas price – Reference price is 145 lei/MWh – 125 lei/MWh = 20 lei/MWh

Example 2
Contract gas price is 225 lei/MWh
The reference price of natural gas is 125 lei/MWh
The amount of compensation granted, determined as a percentage of 33% is 225 lei/MWh x 33% = 74.25 lei/MWh
The value resulting from the application of the 33% compensation is 225 lei/MWh – 74.25 lei/MWh = 150.75 lei/MWh
Since the value resulting from the application of the 33% compensation is higher than 125 lei/MWh, the compensation is the one determined on a percentage basis.

Bill compensation – for vulnerable consumers

Vulnerable consumers will also be able to benefit from energy bill compensation in addition to the heating aid and energy supplement they can receive under the Vulnerable Consumer Act.

Thus, for household customers who are beneficiaries of the financial aid for vulnerable energy consumers, if the compensation provided for by the law is higher than the amount of aid granted to vulnerable consumers, they will benefit from the compensation calculated as the difference between the compensation provided for in the Annex and the level of aid granted to the same household customer as a vulnerable consumer. The compensation of the vulnerable consumer is made in compliance with the maximum consumption limits.

Bill compensation – for residents of blocks of flats with central heating

The compensation scheme also applies to centrally heated apartment blocks using natural gas as fuel and which have a single consumption point serving the residential premises in the apartment block.

The support scheme is applied in the bills issued to the owners/tenants association for the natural gas consumption of the condominium.

For the calculation of the compensation, in the case of condominiums, the daily reference consumption shall be determined as the product of the daily reference consumption set out in the Annex and the number of dwellings forming part of the condominium.

In order to benefit from the compensation, the representative of the condominium management or the owners of the condominium shall submit monthly to the natural gas supplier the method of apportioning the total consumption and the corresponding consumption of each household customer within the condominium.

Measures for SMEs, micro-enterprises, PFA’s

The bill offsetting law also comes with measures for small and medium-sized enterprises, microenterprises, licensed individuals, sole proprietorships, family businesses.

More specifically, they will be exempted, in the case of electricity, from the payment of the counter value of regulated tariffs, i.e. the feed-in tariff, the distribution tariff, the system service tariff, the transmission tariff, as well as from the payment of green certificates, the contribution for high-efficiency cogeneration and excise duties.

In the case of natural gas, these customers will be exempt from paying the transmission charge, the distribution tariff and excise duty.

Price capping

Electricity and natural gas prices are capped for the period from 1 November 2021 to 31 March 2022 for the following final customers: household customers, public and private hospitals, non-governmental organizations, as well as religious establishments and public and private providers of social services.

The final invoiced price of electricity is capped at a maximum of 1 leu/kWh, of which the electricity price component will be a maximum of 0.525 lei/kWh.

The final invoiced price of natural gas shall be capped at a maximum of 0.37 lei/kWh, of which the natural gas price component shall not exceed 0.250 lei/kWh.

The ceilings provided for represent the final price invoiced to the final customer, including: a) for electricity – the electricity price component, excise duty, regulated transmission and distribution tariffs, system services, green certificates, high energy efficiency cogeneration contribution, supply costs and VAT; b) for natural gas – the selling price of natural gas, transmission cost, storage tariff, excise duty, distribution tariff, supply costs and VAT.

Subsidies for municipalities

For the period from 1 November 2021 to 31 March 2022, the Government will allocate to the budgets of the territorial administrative units a subsidy to cover the increase in the price of Gigacalorie in the amount of 50% of the resulting difference between the purchase price of natural gas and the capped price of natural gas of 0.250 lei/kWh.

Taxing additional revenues from the price increase

The additional income earned by electricity producers resulting from the difference between the average monthly electricity selling price and the price of 450 lei/MWh is taxed at 80%.

Producers of electricity from fossil fuels, including cogeneration, are exempt from these provisions.

Sursa foto: Parlamentul European

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