Romania revises legal provisions on social protection of energy consumers

In response to the rising costs of the international electricity and gas markets and their effects, the Romanian government issued Emergency Ordinance 3/2022 (GEO 3), published in Official Gazette no. 79 of January 26, and amending and supplementing Government Emergency Ordinance no. 118/2021 (GEO 118) establishing a compensation mechanism for the consumption of electricity and natural gas for the period from November 1, 2021 to March 31, 2022.

The two GEOs establish a mechanism to help pay bills related to electricity and natural gas consumption by granting monthly compensation to residential customers and other end customers, such as small and medium-sized enterprises, individual medical practices and other liberal professions (regardless of the form of organization) authorized natural persons, sole proprietorships, family businesses, public and private hospitals, schools, kindergartens, NGOs, etc.

GEO 118 targeted residential customers whose maximum consumption during the winter period does not exceed the threshold of 1500 kwh for electricity and 1000 cubic meters of gas. These thresholds are now increased to 1900 kWh, respectively to 1200 cubic meters. According to GEO 3, for consumption between February 1 and March 31, 2022, electricity and natural gas prices are capped as follows for residential customers:

  • the final invoiced price of electricity is capped at a maximum of 0.8 RON/kWh, VAT included (approximately 0.162 EUR) of which the electricity price component will be worth a maximum of 0.336 RON/kWh;
  • the final invoiced price of natural gas is capped at a maximum of RON 0.31/kWh, including VAT (approximately EUR 0.063), of which the natural gas price component will be worth a maximum of RON 0.200/kWh.

The difference between the weighted average price of current contracts with delivery between November 1, 2021 and January 31, 2022 and the maximum ceiling price of electricity and natural gas will be compensated by the state budget through the ministry budget Energy. Each month, electricity and natural gas suppliers must submit supporting documents to the National Energy Authority (ANRE) in order to claim this compensation. ANRE will establish the value of each supplier’s compensation within 30 days. It will then submit the information to the Ministry of Energy, which will make compensatory payments to suppliers within 15 days.

Suppliers who do not comply with the integrated provisions will be penalized with fines ranging from 20,000 RON (4,000 EUR) to 200,000 RON (40,000 EUR).

GEO 3 also provides corrective actions for end customers affected by erroneous invoices issued by suppliers. These actions include the recalculation of invoices within 15 days and the reimbursement of differences erroneously noted and paid to electricity or natural gas suppliers (i.e. distribution operators who resell electricity to end customers) within a reasonable period which may not exceed five calendar days from the date of a report. GEO 3 prohibits the application of penalties or the interruption of the supply of energy for non-payment of invoices issued in error.

Far. 259/2021 implements an exceptional 80% tax on GEO 118, which is another important provision that affects power producers. When applying GEO 118, the additional income generated by electricity producers resulting from the difference between the average monthly electricity sales price and the price of 450 RON/MWh will be taxed at 80%.

This tax must be declared and paid by electricity producers each month until the 25th of the month following the month in which this tax is due. An exception has been made for the period from November 1 to December 31, 2021, for which the tax was declared and paid until January 25, 2022.

Joel C. Hicks