Deregulated electricity prices for household consumers, delayed by 2 years; gas remains uncertain

Regulated prices in electricity for household consumers will be phased out gradually by 2017 rather than 2015, said Istvan Szekely, head of the European Commission in Romania. However, there will be no delay for industrial consumers, where adjusted prices will be enforced starting 2013.

The troika (European Commission, International Monetary Fund, World Bank) will discuss the deregulation of gas prices in the next review mission scheduled for April. Representatives from the oil & gas industry will be consulted in this area, and a roadmap will be created until the next mission.

“There is no plan to increase natural gas prices in 2012. On electricity, for industrial consumers, the process will start in the following months, while the increase for household consumers will be gradual, starting 2013,” said Jeffrey Franks, head of the IMF mission in Romania.

Franks said that Romania is an EU member, thus should bring electricity prices to European levels, which will spur investments in the energy sector. However, poor households will be protected by surging prices, although subsidies for most consumers will be cut. At the moment, authorities are defining the vulnerable consumers entitled to state aid.

Corneliu Bodea, vice-president of AdremInvest, an engineering company which is currently developing projects in the renewable segment, told BR that the Government’s attempt to protect its citizens is legitimate, but the business perspective of large companies present here will be impacted and there is the danger of withdrawal from the market.

“I am sure the Government, suppose the IMF and EU accept this, prior to enforcing it, will find ways to communicate and agree with these companies, because it is fine to protect the people, but it would be grave if energy companies withdraw from Romania. I am talking about E.ON and Gaz de France (GDF), because there is an issue of natural gas prices,” said Bodea.

President Traian Basescu wanted to delay the liberalization of prices in electricity and gas through to 2020, both for household and industrial consumers, arguing that the economy and the local purchasing power can’t cope with the adjusted prices.