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Important Changes to the Romanian Energy Bills Support Scheme

Important Changes to the Romanian Energy Bills Support Scheme

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On 1 September 2022, Emergency Ordinance No. 119/2022 (“GEO 119/2022”) amending Emergency Ordinance No. 27/2022 on measures applicable to final customers in the electricity and natural gas market in the period between 1 April 2022 and 31 March 2023, as well as for amending certain regulatory acts in the energy field (“GEO 27/2022”) was published in the Official Gazette of Romania no. 864 and entered into force on the same date. Below is a selection of the provisions set forth under GEO 119/2022.

1. Amendment of the duration of application of the support measures laid down in GEO 27/2022

The period of application of the final price cap scheme has been extended until 31 August 2023 for both gas and electricity consumption.

2. Amendments concerning household electricity customers

For the electricity consumption during the period from 1 September 2022 to 31 August 2023, the final price cap invoiced by electricity suppliers is:

  1. of maximum 0.68 RON/kWh, VAT included, for household customers whose average monthly consumption at the place of consumption in 2021 is between 0-100 kWh inclusive; this aspect has not been amended following the enactment of GEO 119/2022.
  2. of maximum 0.80 RON/kWh, VAT included, for household customers whose average monthly consumption at the place of consumption in 2021 was between 100.01 and 300 kWh, for a monthly consumption of up to 255 kWh (compared to 300 KWh/month under the previous form of GEO 27/2022).

In addition, the final invoiced price referred to in points a) and b) above shall also apply, depending on the actual monthly consumption, to (i) the household customers’ consumption places connected as of 1 January 2022 or (ii) for household customers with no electricity consumption records in 2021 with the supplier.

3. Limitation of the categories of non-household customers benefiting from the electricity price cap

Under the new amendments, only the following categories of non-household customers can benefit from the price cap:

  1. Small and medium-sized enterprises and economic operators in the food industry - maximum 1 RON/kWh, VAT included, for 85% of the average monthly consumption at the place of consumption in 2021;
  2. Public and private hospitals, public and private educational establishments, crèches, public and private providers of social services - maximum 1 RON/kWh, VAT included, for full consumption;
  3. Public authorities other than those referred to in point b) - maximum 1 RON/kWh, VAT included, for 85% of the average monthly consumption at the place of consumption in 2021.

For beneficiaries referred to in points a) and c) who have no consumption history in 2021, the percentage of 85% applies to monthly consumption.

4. Changes to the way the average purchase price is calculated

The average purchase price shall be calculated by each supplier, for each month of the period of application of GEO 27/2022, and shall include:

  1. the countervalue of electricity/ natural gas purchased under all forward and day-ahead/ intra-day market contracts, including the countervalue of the natural gas extracted from the underground gas storage facilities (excluding, as a novelty introduced by GEO 119/2022, the countervalue of the quantities purchased in the month of analysis and intended for storage in underground gas storage facilities) and the transfer value between the production activity and the supply activity in the case of producers supplying electricity/ natural gas to final customers.
  2. the countervalue of the imbalance achieved, but not more than 5% of the countervalue of the electricity/ natural gas referred to in point (i) above.

5. Contribution to the Energy Transition Fund. Specific obligations for non-resident persons trading on the energy market in Romania

For (i) electricity producers, (ii) aggregated electricity producing entities, (iii) traders, (iv) suppliers carrying out trading activity and (v) aggregators trading electricity and/or natural gas on the wholesale market, the new amendments replace the 80% tax on additional revenues with a contribution to the Energy Transition Fund, due during the period 01.09.2022 - 31.08.2023, which will be used to pay compensation to electricity suppliers.

For electricity producers, the contribution to the Energy Transition Fund is determined if the monthly sales price is higher than 450 RON/MWh and is calculated as the product of the difference between the monthly sales price and 450 RON/MWh and the physical monthly quantity delivered. In turn, the monthly sales price is calculated as the ratio between the monthly net revenue and the quantity physically delivered monthly on the electricity markets.

For the other categories, GEO 119/2022 provides a separate formula for calculating the Energy Transition Fund contribution.

In order to pay the contribution to the Energy Transition Fund, as of 1 September 2022, non-resident persons trading on the Romanian energy market are obliged to calculate, declare and pay the contribution directly or appoint a representative to fulfil this obligation. The representative must be domiciled/established in Romania and is jointly and severally liable with the non-resident for the declaration and payment of the contribution.

Non-residents are required to provide a guarantee in the form of a bank letter of guarantee or cash collateral, in the amount of EUR 1 million, equivalent in RON.

Failure to comply with the provisions on the payment of the contribution, under the specific conditions established for non-residents, entails the suspension of the right to operate on the Romanian markets.

6. New obligations relating to the sale of electricity through directly negotiated bilateral contracts

Starting from 1 September 2022, electricity producers may sell the available electricity for delivery until 31 December 2022, through directly negotiated bilateral contracts, only to the following categories:

  1. suppliers of electricity to final customers, intended exclusively for their consumption;
  2. electricity distributors;
  3. the national system operator Transelectrica;
  4. consumers who have benefited from the provisions of Government Emergency Ordinance No. 81/2019.

7. Establishment of a maximum level of the weighted average electricity price at which ANRE calculates the amounts to be settled from the State Budget for electricity suppliers

According to the new amendments, the maximum value of the weighted average electricity price at which ANRE calculates the amounts to be settled from the state budget for electricity suppliers is 1,300 RON/MWh. 

8. Amendments concerning the obligations of natural gas producers carrying out onshore and/or offshore extraction activities

From 1 September 2022 to 31 August 2023, natural gas producers carrying out both onshore and/or offshore extraction activities and natural gas sales activities are obliged to sell, at a price of 150 RON/MWh (compared to 250 RON/MWh under the previous version of GEO 27/2022), the necessary quantities of natural gas resulting from current domestic production activity to: (i) suppliers of heat producers or (ii) directly to heat producers, as the case may be, only for the quantity of natural gas used for the production of heat in combined heat and power plants and in thermal power plants intended for consumption by the public for the period from 1 November 2022 to 31 August 2023 to meet the consumption needs of these customers from current production and from underground gas storage.

During the period from 1 September 2022 to 31 October 2023, in case of natural gas producers carrying out both onshore and/or offshore extraction activities and electricity production activities using natural gas, the transfer price of natural gas used for electricity production shall not exceed 100 RON/MWh. 

9. Introduction of new sanctions

As a novelty, GEO 119/2022 introduces the sanction of fine related to the turnover of the offender in case of successive sale of electricity or natural gas quantities by traders and/or suppliers engaged in trading activities, with the clear aim of increasing the price. According to GEO 119/2022, this misdemeanor is sanctioned by ANRE with a fine of 5% of the turnover.

By Monica Iancu, Partner, Ionel Macovei, Associate, and Vasile Soltan, Associate, Bondoc si Asociatii