Romanians to be allowed to switch electricity suppliers as from 2010

Although Romania’s energy market was fully liberalised in 2007, Romanians will have to waituntil 2010 to be allowed to switch electricity suppliers, according to estimates of the National EnergyRegulatory Authority (ANRE) that competition on the segment of electricity supplying for householdusers will increase only three-five years after liberalisation is completed.
On paper, Romania’s energy market reached the level that would offer household users anoption to choose electricity suppliers with the completion of the liberalisation process on July 1, 2007, but the effects of the process on the household users are far from being felt yet. In the time since July 1, 2007, no household user has switched electricity suppliers by exercising the eligibilityright that allows free choice in selecting the supplier.
The causes, analysts say, are multiple, startingfrom the lack of public knowledge of the option, and continuing with lacking market preparednessin terms of the regulatory framework requested for the operation of a competitive market on this market segment and in terms of the suppliers’ technical training.
Most of the analysts argue that the main problem now arresting the development of a competitiveretail market in electricity has to do with regulated prices.
Chairman of the Romanian National Institute for Energy Engineering and Use (IRE) Jean Constantinescu says regulated prices for the energy supplied to household users do not fullycover total costs, and the price margins have to be borne by the industrial users, which hugely increases the energy costs sustained by industrial users.
He argues that while household users pays 10-15 percent more than the industrial ones for electricity in Romania, the same difference in Germany is standing at 140 percent, because, he explains, prices in Germany reflects real costs while in Romania the electricity prices paid by household users are subsidised.
According to Constantinescu, a solution for real competition on the retail market in electricity should be adjusting prices gradually to the level of costs and cancelling the subsidised prices, while establishing a separate aid mechanism for people on small income.
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