Executive Vice-Presidents, dear Commissioner,
On 29 October 2021, Romania adopted a new Ordinance 118/2021 on urgent measures to manage the effects of rising energy bills. The Ordinance immediately came into force on 1 November1 .
The Ordinance contains a number of welcome measures to alleviate the burden of the current rise in energy prices on end-consumer bills, such as direct financial support to consumers or a reduction of taxes and levies, which are compatible with EU rules and recommendations.
However, article II introduces a clawback mechanism for power generators, aimed to capture revenues considered “excessive” in relation to current prices. In the final text of the Ordinance, the clawback mechanism has been restricted to renewable and low-carbon power generation. We challenge the compatibility of the clawback mechanism with EU law.
EFET, Eurelectric and WindEurope acknowledge the Romanian government’s concerns about the affordability of energy supply to its citizens and industry. However, we regard the introduction of a clawback mechanism on renewable and low-carbon power generation to be ill-advised as it misses the aim to protect consumers from rising prices:
- it creates significant short-term market distortions in Romania and the wider region
- it introduces discrimination between producers of electricity based on generation technology
- it reduces the confidence of investors by introducing high regulatory uncertainty
- it puts the energy transition at risk in the long run