Romanian PM Ponta announces some support for large energy consumers

By bne IntelliNews March 25, 2014

Romania’s PM Victor Ponta has outlined in parliament the measures considered by the government for helping large energy consumers – including waivers for renewable energy surcharges and possibly lower taxation of gas deliveries that might result in lower gas prices on the free market, Bursa daily reported.

The statements were however unclear and the daily used unofficial sources to learn the technical details of the measures.

GOVERNMENT TO ENCOURAGE POWER EXPORTS ALSO. Supplementary, the government wants to offer waivers for the co-generation surcharge to electricity exporters. The co-generation surcharge is collected from all end-users, through electricity suppliers, under a per-MWh mechanism – in order to support the investors in high efficiency heating/electricity generation capacities. Waiving the surcharge for the electricity exports would encourage the exports – but have no direct impact on the domestic prices. Indirectly, however, since the coal-fired power plants would operate at higher capacity they might indeed incur lower production costs per MWh and decrease the price on the free domestic market – as an indirect effect.

In regards to the two measures envisaged by the government for helping the large industrial energy consumers, the renewable energy surcharge for such large-sized users might decrease by up to 85%, PM Ponta announced. The move would be based on an EC recommendation, expected on April 8, which allows individual countries to take such steps. The government would cut the surcharge for large consumers only after the EC’s endorsement, Ponta stressed.

On the natural gas side, Ponta was less clear – but Bursa daily used unofficial sources to figure out the government’s plans. Specifically, the government considers charging the 60% supplementary tax paid* by domestic natural gas producers for the differential between current market price and the initial regulated price instead of current regulated price and initial regulated price. Domestic gas producers were paying the 60% tax on the differential between regulated current and initial prices, irrespective whether the gas was supplied on the regulated segment or on the free market. This was a break against the decrease of prices on the free market, the daily explains. The amendment is expected to become effective April 1.

* under emergency ordinance 37/2013

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