The accelerated increase in natural gas and electricity prices starting in the second semester of 2021, with a significant impact on inflation, has led to a number of intervention and consumer support measures across the member states of the European Union (EU).
In Romania, the intervention measures started with Government Emergency Ordinance (GEO) no. 118/2021, to establish a compensation scheme for the consumption of electricity and natural gas for the cold season of 2021–2022, and the law approving it. That was followed by GEO no. 27/2022, GEO no. 106/2022 and, last but not least, GEO no. 119/2022. It should be noted that Romania had already had a specific taxation system in place for the oil and gas sector (e.g. additional taxes, petroleum royalties) for many years. Under that system, this sector’s profits are subject to an effective tax rate higher than the corporate income tax rate of 16%.
Electricity prices started to rise due to a combination of factors, with the most important being the high price of natural gas used for producing electricity.
Natural gas-fired power plants are needed to meet electricity demand when it peaks during the day or when the volumes produced by other technologies, such as nuclear, hydropower or renewable energy, are insufficient to cover the demand.
Moreover, Russia’s military aggression launched in February 2022 against Ukraine, a contracting party to the European Energy Community, has caused natural gas supplies across the EU to decrease significantly. The war in Ukraine has also created uncertainty about supplies of other commodities, such as coal and crude petroleum, used in electricity generation facilities, thus causing further substantial increases in, and implicitly volatility of, the electricity price.
In this context, the European Commission decided that a coordinated response was needed across the EU member states, and it published the proposal for the Emergency Intervention Regulation regarding energy prices on 14 September 2022. According to the Commission, uncoordinated national measures could affect the functioning of the internal energy market, thereby jeopardising supply security and leading to further price increases in the member states most affected by the crisis.
After a series of debates and certain amendments, Regulation (EU) 2022/1854 of the Council was published in the Official Journal of the European Union on 6 October 2022.