The accelerated increase in gas and electricity prices from the second half of 2021 onwards, with a significant impact on inflation, has led to a series of consumer intervention and support measures among EU Member States.
In Romania, the intervention measures started with Emergency Ordinance (GEO) no. 118/2021 on the establishment of a compensation scheme for the consumption of electricity and natural gas for the cold season 2021 - 2022, the law approving it, GEO no. 27/2022, GEO no. 106/2022 and last but not least GEO no. 119/2022. On the other hand Romania has already implemented for many years a specific taxation system for the oil and gas sector (e.g. additional taxes, oil royalties), which makes the profits from this sector subject to an effective tax rate higher than the corporate income tax rate of 16%.
Electricity prices have started to rise due to a combination of factors, the most important of which is the high price of natural gas, which is used in the electricity production process.
Natural gas-fired power plants are needed to meet electricity demand when demand is at its highest during the day or when the volumes of electricity produced from other technologies, such as nuclear, hydro or renewables, are not sufficient to meet demand.
Moreover, Russia's military aggression against Ukraine, a contracting party to the European Energy Community, which started in February 2022, has led to a significant decrease in gas supplies to the EU. The war in Ukraine has also created uncertainty about the supply of other commodities, such as hard coal and crude oil, used by power generation plants, thus leading to substantial additional increases and thus volatility in electricity prices.
In this context, the European Commission has decided that a coordinated response by EU Member States is needed and has published its proposal for an Emergency Energy Price Intervention Regulation on September 14, 2022. According to the Commission, uncoordinated national measures could affect the functioning of the internal energy market, jeopardizing security of supply and leading to further price increases in the Member States most affected by the crisis.
After a series of debates and some amendments, on October 6, 2022 the Regulation was published in the Official Journal of the Union Council Regulation (EU) 2022/1854.
