ACUE: The budget rectification covers less than 25 percent of the energy price caps financing needs, exposing to a major risk the functioning capacity of the whole energy sector

The current budget revision does not include the amounts necessary to cover the energy price caps assumed by the Romanian state for the period April – December 2022 and exposes to a major risk the capacity of the entire energy sector to function, according to ACUE.

In the local and international context, marked by a sharp increase in energy prices and a lot of uncertainties regarding the security of supply, the decision to “sub-budget” a support scheme assumed by the Romanian state, benefiting about 90 percent of household and non-household customers, it represents an additional major risk, seriously affecting the resilience of the entire energy sector.

The authorities have full visibility of the energy market and do not have to wait, as they said, for April settlements to correctly estimate the financing needs. It is worrying that the authorities do not have a perspective of the evolution of the market and they dodge from the obligation to secure the necessary funding, by invoking delays in the settlement process, which were also created by the state institutions, through delays in defining procedures, which were also unclear and defective.

“The money is not for suppliers, but for energy consumers. The suppliers are allocating in advance, from their own resources, this support for the clients. Thus, directly and immediately, this decision risks a blockage in the supply activity, but the subsequent impact will be felt at the level of the entire energy sector and, ultimately, at the final customers”, says Daniela Daraban, Executive Director of ACUE, Federation of Associations of Energy Utility Companies.

For the draft budget amendment submitted to public debate, ACUE considers that the Ministry of Public Finance has the duty to ensure:
• Realistic budgeting of commitments made to final customers through cap price schemes in force.
• Adapting working scenarios to market reality, to ensure the optimal functioning of the energy sector.
• Transparency in the prior establishment and authorization of public revenues and expenditures.

At the same time, for the optimal implementation of support schemes, ACUE considers that the public institutions involved in the settlement process have a duty to ensure:
• Recovery of the 5-month gap for settlement of measures undertaken for support schemes, including the option of deducting outstanding amounts from suppliers’ tax obligations and/or the delay of chain payment deadlines.
• A settlement process within the legal framework (45 days), by adopting clear, explicit and transparent evaluating procedures for assessing payment requests.

Suppliers’ mission is to continue offering energy to their customers. Failure to cover the amounts committed through GEO 27/2022 on time and at the real value, makes vulnerable the suppliers’ ability to support energy procurement, cold season storage, and financial flow on the chain, with an impact on the stability of energy supply, for industries and for every citizen. The role of suppliers – to collect through the final price on the invoice, all costs associated with the energy sector (production, transmission, distribution, taxes, VAT, excise duties, etc.) – is severely affected by under sizing of payment volumes and late settlement.

Given that, due to the price increases recorded in the energy production area, the Romanian state has received record values, (over 11 billion lei only from the taxes on the supplementary incomes) the allocation of under 25 percent of the estimated financing need for support measures to end customers unbalances the entire national energy sector, while in all EU Member States measures to strengthen the resilience of this sector are recommended.

“Almost 10 months after the adoption of a social policy concept, using energy supply companies as intermediaries and pre-funders, it became clear that the protection schemes adopted so far are difficult to implement and unsustainable.” – says Daniela Daraban, Executive Director of ACUE, the Federation of Associations of Energy Utilities Companies.

In order to avoid undesirable effects, we believe it is imperative to review and plan protective measures in line with market realities and in line with good European practice. In this respect, we support the gradual adjustment of cap prices, the provision of direct incentives for consumers, and the targeted protection of low-income customers and economic sectors with high shares of energy costs.