Romania enforces solidarity tax in energy supply chain, extends energy price cap scheme

The solidarity contribution will be paid monthly by electricity producers, aggregate electricity production entities, traders, suppliers which carry out trading activity and aggregators trading electricity and/or natural gas on the wholesale market, according to the decree published on Thursday on the government's website.

The contribution, calculated as the difference between the monthly sales price and a reference price of 450 lei ($93/ 92.7 euro) per MWh, will go to the Energy Transition Fund, which will serve as a financial reserve to support the government's energy subsidies scheme for the population and some small companies.

Under the same emergency decree, the government extended a support scheme protecting households and small businesses from the rise in energy bills until end-August 2023. Initially, the compensation scheme was supposed to run until end-March 2023.

The government also decided to decrease the volume of consumption to which subsidized retail prices apply to 255 kWh per month from 300 kW. According to energy minister Virgil Popescu, some 7.2 million households in Romania consume up to 255 kWh per month, while 7.6 million consume up to 300 kWh per month. "With this new ceiling, we try to get the population to save on power consumption," Popescu said during a live-streamed press conference on Thursday evening.

Popescu also said that the decree will punish repeated trading of energy between various actors in the market with the aim of artificially increasing the price. The penalty will be 5% of the turnover of the respective companies.

(1 euro=4.8525 lei)