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The Center for the Study of Democracy comes up with proposals to improve the vulnerable consumer law

6 January 2021

The Center for the Study of Democracy (CSD), a think tank of the Babeș-Bolyai University Political Science Department, submitted to the Ministry of Labor and Social Protection a series of amendments to the bill on establishing social protection measures for the vulnerable energy consumer in Romania. These aim to a more precise definition of energy vulnerability and to the transformation of Annex 1 into a calculation tool by including in the calculation of the average monthly consumption of a household.

President of the Center for the Study of Democracy, Dr. George Jiglău, together with his colleagues Anca Sinea, Corina Murafa and Gabriel Bădescu, produced a report in 2017 on the spread and manifestations of the phenomenon of energy poverty in Romania. Starting from this and capitalizing on “a vast network of researchers and practitioners from Europe in universities, NGOs, professional and employers’ associations, energy companies or consulting companies”, the Center has launched several proposals aimed at increasing the consistency of the draft law under public debate.

The President of the Center for the study of Democracy stresses that improving the standard of living from the perspective of access to energy services in households is fundamentally dependent on the launch of “a comprehensive energy assessment action for residential buildings, both in urban and rural areas, followed by an extensive investment program”. Furthermore, “the amount of aid for heating should also be linked to the energy performance of the dwelling and not just to household income, in order to avoid situations where a household has apparently sufficient income (“above threshold”), but it is in an inefficient building that leads to high energy consumption and associated costs, so that the share increases above a limit that can be borne by the household,” adds dr. George Jiglău.

The proposed solutions take into account the condition of residential buildings in a fast applicable way, based on building parameters already in the possession of local authorities or which can be identified by the forms used to request the aid for heating, without “loading” the process.

Who is vulnerable

CSD proposes to redefine the thresholds for the provision financial aid for heating by using calculation methods similar to those in the United Kingdom or Italy; this is by linking total household income for covering minimum energy needs with the poverty threshold, so as a household in “energy vulnerability” to be considered that where the income resulting after extracting the energy costs from the total income would result for it to be under the poverty line.

The costs for providing minimum energy needs would thus be calculated, taking into account the structure of the household, but also the technical parameters of the building.

Proposed method of calculation, validated scientifically and practically in the countries specified as a model:

  • Monthly standard poverty threshold * Number of equivalent adults in the household = Monthly household poverty threshold
  • Monthly household poverty threshold * 12 = Annual household poverty threshold
  • Annual household poverty threshold + Annual minimum energy costs = Annual household energy vulnerability threshold
  • Monthly total income of the household *12 = Annual total income of the household

The household is under energy vulnerability if the total annual income of the household is lower than the household’s annual energy vulnerability threshold.

CSD calculations show that for an apartment with one room in a building built 40 years ago, connected to the heating network, located in temperature zone 1, the heating aid could be granted if the total annual income of the adult residents was below 17.670 lei. For an apartment of 3 rooms with heating on methane gas, from a similar block, but located in temperature zone 3, the threshold of energy vulnerability would be 25.772 lei per year, which corresponds to a monthly value of about 1.360 lei per adult. Aid for heating could be granted to a household of this kind if its annual income is below 25.772 lei.

Dr. George Jiglău notices that the monthly values resulting from the bill are significantly above the threshold of 810 lei/person stipulated in the current draft law, so the application of such an indicator would ensure a much better coverage of the energy vulnerability due to the reduced revenues, in a way that also takes into account the characteristics of the dwelling.

Energy needs must include cooling

CSD proposes that minimum energy needs be defined by law by means of a minimum consumption in a household for a decent standard of living by reference to the structure of the household (expressed in terms of the number of equivalent adults), housing characteristics and temperature zone. If minimum energy needs are specifically defined, energy poverty can be defined as the incapacity to cover these minimum needs throughout the year, and energy vulnerability can be understood as a situation that may lead to energy poverty. Therefore, the definition of the minimum energy needs should also include the “optimum cooling of the dwelling in the hot season”.

For the purpose of accurately monitoring and identifying vulnerable energy consumers, the CSD proposes conversion of Annex 1 into a calculation tool by including in the calculation of the monthly average consumption of a household the following elements: 1) construction material (concrete, brick, BCA, wood, straw), 2) heated useful area, 3) residential area, 4) equivalent adults, 5) number of zones, 6) type of heating, 7) temperature zone and 8) energy performance certificate to be carried out through in-depth building renovation programs launched by central or local authorities, or by energy service companies.

The CSD also proposes two types of average consumption to be calculated: one for the cold season and one for the year. This differentiation can help to identify those households in energy poverty in relation to the cooling of the household during the summer period.

In addition, the calculation of average consumption in relation to household-specific values for these parameters makes it possible to identify, with the help of energy suppliers, those situations where a household’s regular energy consumption is too high (significantly above the average) and, linked to household income, to identify situations where an intervention in the efficiency of the building (in the absence of, or combined with, financial aid for heating) is an appropriate measure to combat or prevent energy poverty.

Finally, the CSD proposes an Annex 2 to be developed, which would perform a calculation based on the same parameters for the minimum consumption necessary to cover minimum energy needs.

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