Price capping and ongoing agreements in the context of Coronavirus Pandemic

3. apríla 2020

Ștefan Botezatu

act legal Romania

What’s new? Capped prices for electricity and heat, gas, water, sanitation and fuels from 29 March 2020 until the end of the state of emergency. The capping means in this case that the prices cannot increase above the level existing on 29 March 2020, but they can decrease according to supply and demand. This measure was taken through Military Ordinance no. 4/2020. </p>

Who’s affected? The Ordinance does not differentiate with regard to whom the capping measures will apply, meaning that all prices are capped. Therefore, the measure may be applied to producers, distributors, suppliers and end customers. This leads to a certain degree of confusion, since prices in energy are mostly formed on centralized markets such as the Day-Ahead Market (PZU), OPCOM, commodity exchanges, etc.

Which price will be applied? There are inconsistencies between the price caps established under Decree No. 195/2020 and the Military Ordinance. The possibility of price capping for certain goods and/or services was first introduced through presidential Decree No. 195/2020 for declaring the state of emergency in Romania on 16 March 2020. The decree considers the average prices for the three months prior to 16 March 2020. The price capping under the Military Ordinance considers the price levels applicable on the day of the Ordinance – 29 March 2020.

What’s next? The provisions of the Military Ordinance are very likely to give rise to uncertainty and debate with respect to the capping of the prices, since they stray from the provisions of the Presidential Decree for declaring state of emergency.

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Ștefan Botezatu

O autorovi

Ștefan Botezatu

Managing Partner

Managing Partner and co-founder of act Botezatu Estrade Partners. He has strong expertise in energy regulatory matters covering electricity and gas trading, gas and electricity supply and distribution and production, as well as ancillary services including e-mobility and development of infrastructure for electric vehicles. Throughout his legal career of over 21 years, he has advised an impressive number of high-profile clients active in various business sectors in CEE/SEE and Asia. He is an excellent closer and forward thinker. Stefan is a 'sharp, knowledgeable, pragmatic and efficient lawyer', recognised for his work in competition cases concerning the energy sector. He has extensive experience in Energy, Dispute Resolution, Corporate M&A, Competition and Infrastructure Transactions. Expert in disputes and regulatory matters covering electricity and gas trading, supply and distribution and ancillary services. He has represented important companies in energy arbitration files against State owned entities, as well as in sector-specific disputes against the National Regulatory Authority for Energy and companies from the energy and retail sector in antitrust proceedings against the Competition Council. He is coordinating the White-Collar crimes practice and has been exposed to several cross-border fraud investigation matters initiated based on the FCPA and UK bribery act. Stefan`s expertise also covers handling high profile criminal cases and providing crime prevention legal advice, as well as acting in complex business crime litigation. He has an excellent record of successful outcomes for the firm’s clients and establishing favourable precedents in a variety of areas, with a special focus on criminal law matters in the energy sector.

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