Constitutional Court ruling questions energy price-capping mechanism in Romania

The surcharge levied on energy production companies under Romania’s mechanism aimed at capping the end-user prices is breaching the principles of fair taxation, according to a ruling of the Constitutional Court quoted by Economica.net. The Ministry of Energy says it is analyzing the implications of the ruling.

The Constitutional Court “admitted the exception of unconstitutionality and found that the provisions of art. 15 and those of Annex no. 6 of OUG 27/2022 regarding the measures applicable to final customers in the electricity and natural gas market during the period April 1, 2022 - March 31, 2023, are unconstitutional.”

Several companies in the sector, especially those in the renewable industry, challenged the surcharge.

Under the mechanism, the revenues generated by the surcharge were used to cover the difference between the price paid by the energy suppliers on the wholesale market and the regulated end-user prices. Furthermore, the scheme invalidated by the Constitutional Court failed to work as planned, and the government accumulated hundreds of millions of euros in unpaid subsidies to the energy suppliers.

The article invalidated by the Constitutional Court established the over-taxation of all electricity producers, and the annex details the method of calculating the surcharge.

Essentially, any electricity producer, including those in the renewable sector, had since then to pay 100% of their revenues generated by prices in excess of RON 400 per MWh. The money went to the Energy Transition Fund, from which the suppliers who were forced to bill the capped prices for energy and gas to their customers were paid.

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