Following in the footsteps of the previously adopted Government Emergency Ordinance no. 27/2022 on the measures applicable to final consumers on the electricity and natural gas market between 1 April 2022 and 31 March 2023, as well as for amending and supplementing certain regulations in the energy sector (GEO 27/2022), as well as the subsequent Government Emergency Ordinance no. 119/2022 (GEO 119/2022), which amended GEO 27/2022 as of 1 September 2022, the Romanian Government has recently adopted a new regulatory act, further amending both GEO 27/2022 and GEO 119/2022, and establishing an even higher degree regulatory control over the energy market, in the form of Government Emergency Ordinance no. 153/2022 for the amendment and supplementation of GEO 27/2022 and GEO 119/2022 (GEO 153/2022), published in the Official Gazette of Romania on 11 November 2022.
GEO 153/2022 brings considerable structural changes to the Romanian electricity market, from the perspective of both sell-side and buy-side participants, establishing a fully regulated and mandatory centralized acquisition and sale mechanism, operated by OPCOM (ie, Romanian operator of centralized markets in electricity and natural gas), which shall apply between 1 January 2023 and 31 March 2025.
In a nutshell, the new centralized acquisition mechanism is envisaged to have the following general effects on the various categories of market players:
1) Producers of electricity with an installed capacity of at least 10 MW must notify their expected output, at various intervals, and are further obliged to sell all or part of that output (ie, determined in line with the consumption requirements notified by the operators under pt. (2) below) to OPCOM, at the fixed price of RON 450/MWh.
Certain categories of producers are excluded from this obligation, namely:
- producers of electricity from renewable sources, as listed under Law no. 220/2008 for establishing the system for promoting the production of electricity from renewable sources (ie, hydropower capacities up to 10 MW, wind, solar, geothermal, biomass, bioliquids, biogas etc.);
- electricity production capacities commissioned after 1 April 2022; and
- producers operating capacities for production of electricity and thermal energy in cogeneration that deliver thermal energy into centralized supply systems.
2) The electricity purchased by OPCOM from the producers listed under pt. (1) above is subsequently sold, at the same price of RON 450/MWh, to electricity suppliers that have contracts with final consumers, as well as to the transport and system operator and the distribution system operators, for covering the technical consumption of the electricity grids operated by them.
GEO 153/2022 further details the notification obligations, applicable both to producers, in respect of their electricity production forecasts, as well as to the operators entitled to purchase electricity through this centralized mechanism, in respect of their electricity consumption forecasts. Based on these notifications, and pursuant to the calculation mechanism further detailed under GEO 153/2022, OPCOM will organize one annual acquisition procedure, as well as subsequent monthly procedures which are envisaged to cover the excess output and consumption requirements that have not been previously contracted within the annual procedure.
In the event that the available electricity notified by producers does not cover all of the consumption requirements notified by the operators entitled to purchase electricity through this centralized mechanism, the quantities notified by the transport and system operator and the distribution system operators will be covered in full, with the shortfall being deducted proportionally from the quantity notified by the electricity suppliers.
In the event that the available electricity notified by producers exceeds the consumption requirements notified by the operators entitled to purchase electricity through this centralized mechanism, OPCOM will proportionally reduce the quantity that the producers are obliged to sell through this centralized mechanism. It should however be noted that, considering that GEO 153/2022 establishes both an annual acquisition procedure, as well as subsequent monthly procedures covering the excess electricity production and consumption that was not contracted through the annual procedure, in the event that certain quantities notified by producers for the annual procedure are released from the obligation to sell under this centralized mechanism, such quantities would likely still need to be notified for the monthly procedures, being finally released for sale on the open market only if and to the extent that such are not subsequently contracted under each specific monthly procedure (ie, monthly acquisition procedures cover electricity with delivery in the following month).
Non-observance by electricity producers, as well as by the operators entitled to purchase electricity through this centralized mechanism, of their various notification obligations established under GEO 153/2022 represents an administrative offence punishable with a fine between 1% - 5% of their annual turnover from the previous financial year. The same penalty applies for producers for non-observance of their obligation to sell to OPCOM the quantities of electricity established and communicated in accordance with the mechanism detailed under GEO 153/2022.
GEO 153/2022 also establishes a special calculation mechanism for the solidarity contribution, previously introduced through GEO 119/2022, applicable to producers that sell electricity through the centralized acquisition mechanism detailed previously. The additional provision establishes that, to the extent that the monthly value of CO2 certificates corresponding to the electricity sold under the centralized acquisition mechanism is lower than the value of the solidarity contribution calculated pursuant to the provisions of GEO 27/2022, the difference between the two should be paid as solidarity contribution. Alternatively, if the monthly value of CO2 certificates exceeds the value of the solidarity contribution, the producer would be entitled to receive such difference. However, it is not very clear how this calculation will be actually performed, considering that the solidarity contribution can be calculated only to the extent that the average monthly selling price of electricity exceeds RON 450/MWh, which is precisely the price at which all quantities subject to this centralized acquisition mechanism are to be sold by producers.
As a final note, GEO 153/2022 also removed the obligation established under GEO 119/2022, whereby producers were obliged to sell electricity through directly negotiated bilateral contracts (PPAs), with delivery until 31.12.2022, only to certain categories of operators, such as electricity suppliers that have final consumers in their portfolio, electricity distributors and the transport and system operator.
By Paula Corban-Pelin, Local Partner, and Teodor Sabau, Associate, DLA Piper