Energy price capping and compensation measures should take into account the specific needs of households, distinguishing between the high consumption of electricity to ensure basic (minimum) energy needs and that for amenities that are more about comfort. For example, electricity consumption increases in winter for those that use air heaters or electric radiators in the absence of another accessible form of energy (natural gas or wood), or because there are frequent interruptions in the supply of thermal energy from the centralized heating system, say experts of the Romanian Energy Poverty Observatory (ORSE). In these cases, consumers will have to consume electricity above the threshold that guarantees them the lowest energy price, in order to cover an essential need: that of heating.

Also, support schemes must also support households that have opted for new non-polluting technologies, such as heat pumps, which have high electricity consumption.

“The measures taken by the Romanian state try to cover the problems at the household level, but we cannot consider these measures to be sustainable, since, instead of being directed towards vulnerable groups and towards the structural causes of vulnerability, they are only applicable in the short term. Moreover, this is the nature of the measures generally taken over the years regarding the difficulties of households to cover their energy needs. In addition, the costs of these measures are very high and have a significant impact on the public budget. In other states, short-term targets have been integrated into a medium- and long-term plan. Romania did not offer such projections,” says Anca Sinea, vice-president of the Center for the Study of Democracy Association and coordinator of ORSE.

One element missing from cap and offset ordinances is basing consumption thresholds on household energy consumption data. These data are not available, as ORSE has argued in previous analyzes and communications.

In the absence of consumption data at the household level, public policy making, including those regarding price regulation measures, can be based on the estimates of energy auditors and energy managers for localities. Their calculations start precisely from the energy requirement of the building and housing, which can be used in connection with the minimum energy needs – a concept introduced in the legislation aimed at energy poverty in 2021, but still insufficiently operationalized. Such an approach would allow the orientation of public funds according to the specific needs of households which, not covered, generate the state of vulnerability.

Statistical data show that, of the total energy consumption of a household, heating accounts for approximately 62%, but the consumption for the preparation of hot water increases according to the number of people living in the residence. For example, in a 50 square meter apartment inhabited by 5 people, the energy consumption for the preparation of hot water can be equal to that for heating the apartment.

Medium and long term solutions

In the context of increased energy consumption for hot water, the solution of solar thermal collectors, especially for single-family homes, of heat pumps, in combination with photovoltaic panels, especially for single-family homes, but also for collective homes, should be financed by stimulating the emergence of energy cooperatives and communities. Such policies will address both the protection of vulnerable consumers and the national decarbonisation objective.

The needs and problems of households facing energy poverty can best be understood through direct interaction, involving local energy experts and existing resources in town halls, public institutions and non-governmental organizations that provide social services. Through direct interactions, short-term interventions can be established – sealing, replacing electrical appliances, advice on reducing consumption, where such a reduction is still possible. Forms of financial support can take the form of vouchers, which can be used to cover identified needs.

In the case of programs for the purchase of modern energy production and use equipment, in addition to simplifying procedures and additional funding to cover the growing demand, complementary measures to encourage households to access these programs are also welcome. For example, through tax deductions, in the case of property tax, or through other tax incentives, or through access to preferential rates that accommodate the higher consumption of electricity for solutions with low emissions (eg: heat pumps).

At the same time, monetary investments, regardless of whether they take the form of direct payments in the form of vouchers or offsets in invoices, or price caps, must be accompanied by information campaigns that explain how energy consumption can be reduced in a way that not to lower the level of thermal comfort (heating and air conditioning) below the needs of a household. Information must reach citizens through multiple channels and in as accessible a language as possible.