New energy market regulations: GEO no. 153/2022

The takeaway 

Government Emergency Ordinance no. 153/2022 (GEO no. 153/2022) established the mechanism for the centralised purchase of electricity to mitigate the economic and social effects of increased energy prices by capping electricity producers’ revenues.

In detail

GEO no. 153/2022 amended GEO no. 27/2022 regarding the measures applicable to final customers in the electricity and natural gas market between 1 April 2022 and 31 March 2023 and GEO no. 119/2022, which had previously amended GEO no. 27/2022.

Brief presentation of the amended normative acts

In March 2022, GEO no. 27/2022 established the categories of domestic and non-domestic customers to benefit from capped prices for electricity and/or natural gas consumption for the period 1 April 2022 to 31 March 2023. A mechanism was also introduced for the state budget to pay the difference between the utilities’ capped prices and the actual prices.

GEO no. 27/2022 also established the calculation mechanism for the 80% tax on the additional revenues received by electricity producers for a monthly electricity sales price of more than RON 450/MWh. The tax on such additional revenues had previously been introduced by Law no. 259/2021 on price capping and invoice compensation.

On its publication in September 2022, GEO no. 119/2022 amended GEO no. 27/2022 to limit the scope of application of capped prices for non-household customers to small to medium-sized enterprises, economic agents in the food industry and public institutions. It also extended the application of capped prices until 31 August 2023, both for natural gas and energy-consumption electricity. For household customers, the final price billed by electricity suppliers was capped at RON 0.8/kWh for an average monthly consumption in 2021 of no more than 255 KWh/month (compared to 300 KWh/month under GEO no. 27/2022).

Under GEO no. 119/2022, as of 1 September 2022, the tax on electricity producers’ additional revenues was replaced by a contribution to the Energy Transition Fund at 100% of the difference between the monthly selling price and the ceiling of 450 lei/MWh.

The contribution now also applies to traders, suppliers who carry out trading activity and aggregators who trade quantities of electricity and/or natural gas on the wholesale market. The formula for calculating the contribution is established in such a way that they register a share of profit of maximum 2% from the trading activity.

European Union regulation on the energy market

The European Council adopted Regulation (EU) 2022/1854 on 6 October 2022 to establish the need for a temporary emergency intervention to mitigate the risk of electricity prices reaching unsustainable levels for final consumers and for EU member states to adopt national measures to address the supply-security threat. This EU Regulation provides that “producers’ market revenues obtained from the production of electricity from certain sources are capped at a maximum of EUR 180/MWh of electricity produced” and that “Member States may maintain or introduce measures that further limit the market revenues of producers who produce electricity”. 

National regulation of the energy market

On 11 November 2022, as a temporary measure to limit electricity producers’ revenues, GEO no. 153/2022 introduced a mechanism for the centralised purchase of electricity for the period 1 January 2023 to 31 March 2025.

The centralised procurement mechanism applies to producers with production capacities equal to or greater than 10 MW.

The mechanism does not apply to economic operators producing electricity from renewable energy sources, those with electricity production capacities put into operation after 1 April 2022 or producers with electricity and heat production capacities in cogeneration that deliver thermal energy through the centralised thermal energy supply system (SACET). The electricity and natural gas market operator, OPCOM S.A., as the sole purchaser.

During the mechanism’s period of application, the sole purchaser buys electricity from producers at RON 450/MWh, then it sells that electricity on at the same price to electricity suppliers with contracts with the customers final, electricity transmission and system operators, and electricity distribution operators.

Market participants have to submit annual consumption forecast statements, broken down by month, to OPCOM S.A. or Compania Nationala de Transport al Energei Electrice Transelectrica S.A., as appropriate.

OPCOM organises an annual procurement procedure in December of the year preceding the year of application, based on the validated data provided by the national energy regulatory authority (ANRE), and a monthly procurement procedure to supplement the quantities included in the annual procedure.

The annual and monthly quantities of electricity resulting from the centralised procurement mechanism constitute firm obligations for the market participants to which the provisions of the normative act apply.

For its role in the centralised procurement mechanism, OPCOM S.A. has the right to charge market participants tariffs and commissions at the level of recorded costs.

Violations of the centralised purchasing mechanism will be sanctioned with fines of 1 to 5% of turnover.

[Government Emergency Ordinance no. 153/2022 for the changes and additions of the Government Emergency Ordinance no. 27/2022 regarding the measures applicable to final customers in the electricity and natural gas market during the period 1 April 2022 to 31 March 2023, as well as for the amendment of the Government Emergency Ordinance no. 119/2022 for the amendment and completion of the Government Emergency Ordinance no. 27/2022, published in the Official Gazette no. 1,091 dated 11 November 2022]