November 11 (SeeNews) - Romania's government on Friday approved an emergency decree partially regulating the energy market by enforcing a centralised mechanism for the purchase of electricity and capping the selling price at 450 lei ($91.5/92 euro) per MWh from January 1 2023 until March 31 2025.
The temporary mechanism for the centralized purchase of electricity is intended to mitigate direct effects of the increase in energy prices on the economy by capping revenues of electricity producers, according to the decree posted on the government's website.
The sole purchaser will be national gas and electricity market operator OPCOM.
"These measures are necessary so that the electricity prices paid by final customers do not aggravate the level of energy poverty and do not lead to a blockage of economic activities at the national level, bearing in mind that it is imperative to ensure a rigorous discipline of the energy market and a high level of protection of citizens in their capacity as consumers," the document reads.
The centralized procurement mechanism applies to producers whose output totals an installed capacity greater than or equal to 10 MW, to electricity suppliers who have contracts with end customers, electricity transmission operators and electricity distribution operators.
The mechanism does not apply to economic operators, producers of electricity from renewable energy sources, to electricity production capacities put into operation after April 1, as well as producers with electricity and heat production capacities in cogeneration which delivers thermal energy to the centralized thermal energy supply system, SACET.
"The sale price is one that ensures the development of further investment by companies and allows further development of new electricity production capacities," energy minister Virgil Popescu said on Friday ahead of the government meeting.
According to Popescu, next week the government will also amend an existing scheme capping energy prices according to consumption to make households, companies and large industrial consumers which exceed monthly consumption of 255 kWh pay 1.3 lei ($0.26/ 0.27 euro) per kWh, and not the market price, as before.
In September, the government announced it has extended the scheme capping energy prices for households and some small companies by five months, until end-August 2023. Under the scheme, households with monthly consumption lower than 100kWh pay 0.68 lei per kWh and those with monthly consumption between 100kWh and 255 kWh pay 0.80 lei per kWh. Small and medium-sized companies pay 1 leu per kWh.
It is not clear yet if this scheme will too be extended until 2025. On Thursday, prime minister Nicolae Ciuca said in a live-streamed statement that the scheme "will most probably be extended by another year", as extending it over a larger period of time would be difficult, given the general unpredictability of energy prices.
(1 euro=4.8919 lei)