Emergency Ordinance No. 119/2022 amending and supplementing Government Emergency Ordinance 27/2022 on measures applicable to end customers in the electricity and natural gas market during the period 1 April 2022 - 31 March 2023 (GEO 27/2022) and amending and supplementing certain regulatory acts in the field of energy was published in the Official Gazette of Romania no. 864 of 1 September 2022 (which is also date when it entered into force).

The ordinance regulates a new regime for electricity price caps and the "solidarity tax", applicable throughout the electricity and gas production chain. Thus, electricity and natural gas traders pay a contribution to the Energy Transition Fund, established in accordance with the methodology set out in GEO 27/2022, which shall be calculated, declared and paid by the seller on a monthly basis. The contribution is also due in the case of the sale of electricity for export or in the case of intra-Community supply and is determined according to the formula set out in GEO 27/2022. Traders will effectively no longer be able to register profits of over 2%, as any surplus will be paid as contribution.

For the purposes of paying the solidarity contribution, as of 1 September 2022, non-resident persons carrying out transactions on the Romanian energy market are obliged to calculate, declare and pay the solidarity contribution directly or to appoint a representative (domiciled or headquartered in Romania and which is jointly and severally liable with the non-resident for the declaration and payment of the solidarity contribution) to fulfil their obligations. Non-resident persons carrying out transactions on the energy market in Romania are required to provide a guarantee in the form of a bank letter of guarantee or cash collateral amounting to the RON equivalent of EUR 1,000,000.

Another novelty of the new legislation piece is the obligation of contracting parties to report to ANRE the bilateral contracts concluded on the wholesale market by direct negotiation within 2 working days from the date of conclusion.

The GEO introduces a legal provision that raises serious practical problems: the successive sale of quantities of electricity or natural gas by traders, with the clear aim of increasing the price, is sanctioned by ANRE with a fine of 5% of turnover. The administrative sanction may be applied only within a 2-year statute of limitation term, which starts to lapse on the day of committing the deed which attracts the administrative liability. Traders will need to pay careful consideration with regard to the operations they conclude, given that the legislation does not establish criteria that would indicate that the operation is made "with the clear purpose of increasing the price". We therefore believe that ANRE should apply such sanctions with the utmost caution.

For more information, please contact Băncilă, Diaconu și Asociații SPRL team.

Prepared by:
Iulian Creangă -  Associate, Băncilă, Diaconu și Asociații SPRL
Ioana Ilie -  Senior Associate, Băncilă, Diaconu și Asociații SPRL

For additional information, please contact:
Andrei Ștefanovici - Director, Băncilă, Diaconu și Asociații SPRL