"The final consumer's bill will be indirectly affected by the introduction of the pillar tax"

Reporter: How did 2024 end for energy suppliers, and what are the prospects for 2025?

Laurenţiu Urluescu: 2024 was a year full of challenges for suppliers, marked by numerous last-minute regulatory changes. The best example of this was the extension of the capped natural gas purchase price for household consumers for the first quarter of 2025, a decision made only at the end of December last year. In other words, the main issue we faced last year was precisely this legislative uncertainty or unpredictability, which has become a hallmark of the central authorities responsible for the energy sector.

Thus, for 2025, we hope for smoother and more coherent rules in the energy market, although, for now, there are no positive signs. For example, it remains unclear whether the compensation and capping system for energy consumers will be entirely removed from April 1st. The press reports conflicting information about whether the current scheme will be extended, discontinued, or replaced by a system targeting only vulnerable consumers. Discussions with central authorities suggest they intend to limit the scheme to vulnerable consumers, but recent media reports indicate other possibilities, leaving us uncertain about what will happen after April 1, 2025.

Reporter: Can energy suppliers sustain the current compensation and capping scheme, considering the state's significant outstanding debts for bill settlements last year? By early December 2024, these unpaid bills totaled almost 6 billion RON.

Laurenţiu Urluescu: The delays recorded in the last quarter of last year persist, with the state failing to settle any invoices submitted over the past 12 months due to verification or payment delays. Effectively, suppliers have borne the entire cost of the energy compensation and capping scheme over the past year. This has impacted their financial performance, with 2024 not yielding notable results. Hopefully, this situation will not recur in the current year.

While this consumer protection scheme has provided some benefits to certain market participants, it has also caused numerous drawbacks. These include companies exiting the market, a significant liquidity decline in the energy market, and reduced appetite for investment. Compared to neighboring countries, energy investments here have been much lower. Therefore, we hope 2025 will bring straightforward, clear, and predictable regulations.

• "Prosumers must not benefit from facilities that are granted only to consumers"

Reporter: How do your hopes align with the provisions of the "train ordinance," which reactivated older taxes in the energy sector that seemingly hinder investments?

Laurenţiu Urluescu: We have long hoped for timely, predictable regulations, but this has not been our reality in recent years. Regarding the pillar tax, it does not directly affect the final consumer's bill because it is not a component of it. However, in the long run, it will have an indirect impact. Producers, distributors, and transport operators paying this tax will need to recover these costs somehow. In other words, over time, the pillar tax will be reflected in the final consumer's bill.

Reporter: What is your stance on prosumer taxation? Does it support energy suppliers or not?

Laurenţiu Urluescu: We see no market benefit from introducing the so-called "sun tax." From our perspective and that of other market participants, prosumers should be treated like any other market participant and should not receive benefits granted only to consumers. Currently, certain benefits designed for consumers have, inappropriately, also been extended to some prosumers, which is unfair to other market participants and consumers. These prosumers generate additional costs, which are eventually socialized-i.e., borne by all consumers. This is inequitable.

Reporter: Returning to the pillar tax, which you mentioned does not directly impact energy suppliers, does it affect distribution networks?

Laurenţiu Urluescu: The supply activity is not influenced by the introduction of the pillar tax. The final consumer's bill is not directly affected by this tax. However, it will be indirectly impacted because producers will sell energy at slightly higher prices to cover this tax. As suppliers, when we purchase energy from the long-term market or the Day-Ahead Market (DAM), it will cost more due to the new pillar tax. Consequently, the energy price for consumers will also increase over time to reflect these additional costs.

• From January 1, 2025, distribution tariffs have increased by 20%

Reporter: What is happening with the Contracts for Difference (CfDs)? What impact will they have on the final consumer's bill?

Laurenţiu Urluescu: The first auction announced by the Ministry of Energy for CfDs was completed at the end of 2024. However, from the suppliers' and consumers' perspectives, the contribution for CfDs, which was initially set to appear in bills from September 1, 2024, was postponed and will now only be included from April 1, 2025. This postponement is positive, as it avoids affecting the price cap for final consumers. The CfD implementation auctions will impact the market later when the energy in question is produced. For now, deferring these costs was the right decision.

Reporter: What is the impact of the 20% increase in distribution tariffs effective January 1, 2025, and when will it reflect in the consumer's bill?

Laurenţiu Urluescu: As you know, distribution tariffs rose by nearly 20% as of January 1, 2025. This increase will appear in the January consumer bills, which we will issue in February. This adjustment, mandated by the National Energy Regulatory Authority (ANRE), obliges suppliers to incorporate the new distribution and transport tariffs into the bills.

Reporter: Thank you.