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Capping energy tariffs will have a positive impact on consumers

30 March 2022
Consumers
Energynomics

The capping of energy tariffs will certainly have a positive impact on consumers during the application period, but the effect on companies depends on how and when the compensation measures will be applied, says Dan Bădin, partner of Fiscal Services, Deloitte Romania.

“Tariff capping will certainly have a positive impact on consumers during the period of application. At the same time, the measure, which is intended to be temporary, could have long-term effects on companies in the field, depending on their ability to manage measureas imposed bu authorities. For the companies involved, especially distributors, the impact depends on how and when the State clearing measures will be applied (for the difference between the purchase price, at market level, and the selling price, capped). According to the regulation, for the domestic clients, the compensations are granted from the budget of the Ministry of Labor and Social Solidarity, and for the non-domestic clients, from the budget of the Ministry of Energy, but it also depends on how well this compensation mechanism will work,” says Bădin.

According to him, the possible delays in the recovery of the respective amounts will put a high pressure on the financial resources of the distributors, with an impact on their solvency.

On the other hand, the Deloitte representative considers that the additional tax imposed on electricity producers will affect their profitability and ability to invest, at a time when energy independence, which cannot be achieved without additional investment, is increasingly being invoked at European and local level.

“From the perspective of the state budget, it is affected in both directions: costs to support distributors, respectively the compensations that the state will have to grant in the account of the price cap, but also revenues from the additional tax of 80%. In addition, it remains to be seen and how these measures will affect energy consumption, the economy as a whole and, consequently, the related budget revenues from related taxes (VAT, excise duties, income tax, etc.), he points out, according to Agerpres.

Dan Bădin referred, in the quoted material, to the long-term perspectives, in the context of the conflict in Ukraine. He believes that the current geopolitical context is postponing the measures announced around the European Green Deal because the European institutions and the individual Member States are looking for solutions to limit their energy dependence on Russia, a challenge that overlaps with that which involves protecting consumers from price increases.

“An agreement with the United States for the supply of liquefied natural gas (LNG) in the EU, the postponement of plans to close coal-fired power plants in certain states, the obligation to build up gas stocks for the following winter (at favorable prices negotiated at the level of an EU workforce) are just some of today’s solutions. In Romania, one of the solutions discussed during this period to reduce energy dependence on Russia is the exploitation of Black Sea gas. But the offshore law, passed almost four years ago, contains a number of provisions that limit investors’ interest in developing projects in the area, and the changes promised by the authorities have repeatedly been delayed. In addition, in the context of the ongoing conflict in the Black Sea area, exploration and exploitation plans may be postponed until the situation is clarified”, he said.

Autor: Energynomics

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