Responses to the Energy Liberalization
In this article, we analyze people’s awareness and attitudes towards the liberalization of the energy market in Romania. The research consisted of an online survey conducted on our platform www.questia.ro and it was active between 16 and 18 January 2018. The survey covered 500 respondents, with a +/- 4% margin of error when reported to the Romanian online population.
According to Economica.net the electricity prices for household consumers have been liberalized from December 31, 2017, when all energy started coming from the free market. The liberalization implies the entry of new and important players into the domestic consumer market with aggressive price offers; the emergence of new energy and services packages for the population; and the extinction of current players that have regional electricity monopoly. Economica.net also points out that despite the liberalization of the market, which brings consistent advantages to users, the protection of vulnerable consumers in Romania from price fluctuations has been abandoned by the authorities because it is considered too costly for the budget. In this manner, the vulnerable consumers will be highly affected by this phenomenon, since there is no safety net offered by the state.
Before the liberalization in 2017, 70% of the price of the energy bills for consumers were coming from the free market, while 30% is the price that ANRE (National Regulatory Authority for Energy) controlled. The percentages coming from the free market in 2018 are 100%. This represents an opportunity for the new players in the market, due to the rise of competition; it affects the way the calculation and reporting of the energy will be made; as well as the behavior of approximately 9 million consumers. They will either keep or change their provider.
For the regional distributors, the stakes will rise, since they will have to take some measures to ensure their competitiveness on the market. This will prove burdensome, especially for those who have many losses or are on the verge of collapse (Complexul Energetic Oltenia şi Complexul Energetic Hunedoara). Experts point out that this can further create vulnerabilities in case of high price fluctuations on the energy exchange.
European regulations require all Member States to identify their own vulnerable consumers, but Romania has not yet legally defined this category, which should theoretically be protected by fluctuations in market prices. There is a minimum income threshold per person below which the consumer is considered vulnerable. In Romania, the project has been blocked, because almost 50% of the population could be considered as belonging to the category of vulnerable consumers and could, therefore, be subsidized by the state for electricity and natural gas bills.
In this article, we highlight consumer awareness for energy liberalization, as well as what are people’s expectation regarding the implications of this.
The majority said that they heard about the market liberalization of the energy sector. However, only a quarter was correctly informed regarding the date that this will happen. The awareness level shows that people are interested in this topic, especially since it affects them directly.
Most respondents heard about this from the TV, especially news reports. Other read about it online, on news sites and blogs. Social media and the written press are also two channels that people got informed, while word of mouth (family/friends/co-workers) played a much smaller role.
Asked whether the energy market liberalization was a good or a bad idea, 72.6% considered this a positive measure. However, only some think that this would affect them directly.
The perceived benefits of the liberalization are mostly connected to the possibility of choosing new providers, foremost. There is also the hope that because new providers will enter the market, prices will decrease. Only some believe they will access new discounts and new types of services with this increase of providers.
Other expectations concern the fluctuation of prices for the energy bills. Here, attitudes are mixed: a quarter believes the prices will be lower, while another quarter believes they will be higher. Only some think that prices will be stable. This shows that there is a need for clarifying the impact of the phenomenon.
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