General Government RegulationsRegulatory & Compliance 23. April 2020

Romania: Updated – Price capping and ongoing agreements in the context of Coronavirus Pandemic

23. April 2020
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Ștefan Botezatu
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act legal Romania

What’s new? – The Presidential Decree No. 240/2020 no longer provides for price capping at the average prices of the three months prior to 16 March 2020. Additionally, in the event of a decrease in the prices of electricity and natural gas, on the regional markets, the Decree provides that the Government will take the necessary measures so that such decrease will be partially or fully reflected in the final price to consumers. However, Parliament Decision No. 4/2020 provides that the restriction of certain rights or freedoms can be ordered only by acts having the force of law.

What is maintained? The possibility of capped prices during the prolongation of the state of emergency for public utility services such as electricity and heat, gas, water, sanitation and fuels is maintained, along with all the measures adopted to enforce the first decree, unless the Presidential Decree no. 240/2020 provides otherwise.

Which price will be applied? Unless other capped prices or tariffs are regulated by the Government, the capped prices at the level existing on 29 March 2020 shall be applied, as provided by the Military Ordinance no. 4/2020.

What’s next? The provisions of the Presidential Decree are very likely to give rise to uncertainty and debate with respect to the capping of the final prices to consumers. It is unclear how the Government will interpret the concept of “regional markets (it should be regarded as referring to EU regional markets only ?) and which measures the Government will take in order to ensure a reflection of the decrease in prices on the regional markets in the final price.

Uncertainty also persists as to how the Government will be able to adopt the restriction of rights; it cannot be excluded that the Parliament intended for the Government to be able to adopt the restrictions only by means of GEO, not by Military Ordinance. In this case, any measures adopted by the Government may be subject to further amendments by the Parliament.

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Article posted on April 4, 2020:

What’s new? Capped prices for electricity and heat, gas, water, sanitation and fuels from 29 March 2020 until the end of the state of emergency. The capping means in this case that the prices cannot increase above the level existing on 29 March 2020, but they can decrease according to supply and demand. This measure was taken through Military Ordinance no. 4/2020.

Who’s affected? The Ordinance does not differentiate with regard to whom the capping measures will apply, meaning that all prices are capped. Therefore, the measure may be applied to producers, distributors, suppliers and end customers. This leads to a certain degree of confusion, since prices in energy are mostly formed on centralized markets such as the Day-Ahead Market (PZU), OPCOM, commodity exchanges, etc.

Which price will be applied? There are inconsistencies between the price caps established under Decree No. 195/2020 and the Military Ordinance. The possibility of price capping for certain goods and/or services was first introduced through presidential Decree No. 195/2020 for declaring the state of emergency in Romania on 16 March 2020. The decree considers the average prices for the three months prior to 16 March 2020. The price capping under the Military Ordinance considers the price levels applicable on the day of the Ordinance – 29 March 2020.

What’s next? The provisions of the Military Ordinance are very likely to give rise to uncertainty and debate with respect to the capping of the prices, since they stray from the provisions of the Presidential Decree for declaring state of emergency.

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Ștefan Botezatu
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act legal - Botezatu Estrade Partners
About the author

Ștefan Botezatu

Managing partner

Managing Partner and co-founder of act Botezatu Estrade Partners. He has strong expertise in energy regulatory matters covering electricity and gas trading, gas and electricity supply and distribution and production, as well as ancillary services including e-mobility and development of infrastructure for electric vehicles. Throughout his legal career of over 21 years, he has advised an impressive number of high-profile clients active in various business sectors in CEE/SEE and Asia. He is an excellent closer and forward thinker. Stefan is a 'sharp, knowledgeable, pragmatic and efficient lawyer', recognised for his work in competition cases concerning the energy sector. He has extensive experience in Energy, Dispute Resolution, Corporate M&A, Competition and Infrastructure Transactions.

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