The energy crisis triggered in Europe in 2021 pushed Romania into an unprecedented situation: electricity and gas prices increased rapidly, a situation that risked turning into a difficult burden for millions of households and for a large part of the economy.
The ceiling brought a transitory benefit to the population, followed by price increases. Photo by Shutterstock
To avoid a social and economic shock, the state decided to introduce a capping scheme, whereby consumers paid a limited price, and the difference from the real market price was covered from the budget.
The capping effect allowed the population to remain at a manageable level at a time when prices in European markets had reached historic highs. The cap also helped to keep medical facilities, schools, public services and small and medium-sized businesses operating that might otherwise have faced disruptions, closures or layoffs.
“According to the accumulated data until 2025, the total cost of these interventions amounts to approximately 30 billion lei“, points out the energy expert Dumitru Chisăliță, president of the Intelligent Energy Association (AEI). Of this, he says, about 18 billion lei were used to cover electricity, while about 12 billion lei went to natural gas. In total, the scheme was applied for more than three years and covered both domestic consumers and an important part of the economic environment.
In addition to that, the state still has arrears to suppliers of 6 billion lei (according to the Ministry of Energy) or 8.3 billion lei in arrears in November 2025, according to ACUE.
The advantages and disadvantages of capping energy prices
According to the energy expert, the short-term advantage of capping was that it calmed the population at a time when prices were exploding and avoided a social shock (bill arrears, massive disconnections, SME bankruptcies). “The large disadvantages in the medium-long term caused market distortions, the consumer price no longer reflected reality, giving a false economic signal that “energy is cheap”, although it was not. It also led to the blocking of money in subsidies and not in investments, but created arrears and high risk for suppliers (suppliers actually financed the capping scheme with their own money, waiting for years to recover their state difference and thus generating cashflow problems, but also additional credit costs, costs that are recovered from customers after the capping is removed and cause high prices”, it is shown in the AEI analysis.
In parallel, the energy expert adds, during the capping period the state collected 67-80 billion lei from taxes (according to AFFER), dividends and various additional taxes generated by the increase in energy prices – “i.e. more than twice as much as he paid in compensation”.
“In the end, the story of energy capping in Romania is the story of a balance: on a plate, people's silence in the face of impossible bills; on the other, the collective financial effort. The capping scheme didn't let the darkness into the houses and the cold into the rooms — but it left behind a shared debt, paid not at the switch, but through the country's budget“, emphasizes the expert.
Where did the state get the money for compensation?
According to the analysis, the financial resources allocated for capping came from taxes applied to energy companies. Economists point out that similar amounts could have been directed to the modernization of the energy system or the development of production capacities that would have led to structurally lower prices. “Furthermore, some of the amounts meant for suppliers are still being paid, which prolongs the budgetary impact of the scheme.
With this money, 36 billion lei (7.2 billion euros) could be built approx. 9,000 MW in solar panels, 7,200 MW in gas plants, 4,000 MW wind, which would have reduced structural prices and import dependency.
The cap remains one of the broadest public interventions of the past decade: a measure that protected consumers and cushioned the effects of the crisis, but came at a significant cost to state finances. The debate is related to the period of application of this scheme”shows Chisăliță.
The more Romanians will pay for electricity in the next 4 years
Analyzing for the period 2020 – 2025, the evolution of the average price actually paid by customers as a result of capping according to ANRE data and the forecasts of the average price of electricity that would have been formed on a free market, if the price cap was not applied (AEI estimate) and the price estimates for the two scenarios for the next 4 years, the following can be found:
• in the period 2021 – Semester 1 2025 people paid an average price 33% lower than the estimated average price that would have existed in a free market.
• in Semester II 2025, people will pay a 28% higher price compared to the estimated price that would have existed on the free market.
• between 2026 and 2029 we estimate that people will pay a 32% higher price compared to the maximum price during this period.
How expensive gas will be until 2028
Analyzing for the period 2020 – 2025, the evolution of the average price actually paid by customers as a result of capping according to ANRE data and the forecasts of the average price of natural gas that would have been formed on a free market, if the price cap was not applied (AEI estimate) and the price estimates for the two scenarios for the next 4 years, the following can be found:
• in the year 2022, people paid an average price lower by approx. 26% compared to the estimated average price that would have existed in a free market.
• in the period from 2023 to 2025, people paid on average a higher price by about 14% compared to the estimated price that would have existed on the free market.
• in the period 2026 – 2028 we estimate that people will pay an average higher price by approx. 18% compared to the maximum price during this period.
“Based on the assumptions and estimates used, the analysis highlights that the financial benefits to consumers in the period 2021-2025 as a result of the electricity price cap are counterbalanced – and potentially exceeded – by the higher price levels anticipated for the period 2026-2029, relative to the reference free market scenario. This finding suggests that the measure generated a transitory benefit, but also induced a temporal redistribution of costs, with negative externalities on market functioning, investment signals and consumer behavior.
From a macroeconomic and institutional perspective, the results point to significant limitations in the ability of administrative price interventions to produce long-term sustainable results without subsequent offsetting effects. At the same time, the implications on the stability of household budgets and on the efficiency of the energy market reveal the need for structural, predictable and oriented public policy instruments aimed at correcting the fundamental causes, not just at temporarily mitigating the effects. In this framework, the final assessment outlines a unfavorable net balance for consumers and questions the advisability of continuing or replicating such measures in the absence of systemic reforms”concludes the energy expert.
