The European Commission published a so-called “reasoned opinion” on Wednesday, May 7th, warning that Romania’s consumer price cap on natural gas that was introduced during the pandemic constitutes an infringement of free market principles, threatening to take the country to court if Bucharest refuses to scrap it.
The dispute stems from a 2021 decision, which capped household energy prices in response to the soaring costs brought about by the pandemic, aiming to help struggling families keep the lights on. Then, the measure remained in place as the war in Ukraine and the sanctions on Russian energy only worsened Europe’s energy crisis, causing the prices to hit new all-time-highs.
Naturally, the affected energy companies, led by the Austrian OMV Petrom, began pushing back last year by complaining to Brussels that the below-market rates set by the Romanian government are causing them to lose profit.
In Wednesday’s document, the EU Commission took the side of these companies, stating that Bucharest “restricts the fundamental principles of free market formation in the gas wholesale market, to the detriment of the internal market and consumers,” which is “incompatible” with EU rules.
The Commission’s ‘opinion’ is the final warning: Romania has two months to respond and scrap the energy price caps, otherwise Brussels will refer the case to the EU Court of Justice (ECJ).
Depending on the outcome of the court case, the document writes, the Commission will then decide whether to follow up with a formal infringement procedure, which could result in Romania losing EU funds and subsidies, or even certain membership rights.
The Commission also noted that Romania’s separate electricity price cap is not included in this warning because several preliminary rulings are already pending before the ECJ.
Meanwhile, Romania is on the cusp of becoming a major gas exporter thanks to the Neptune Deep, an offshore gas field development project that’s expected to start producing 8 billion cubic meters from 2027.
But even the Neptune developer OMV says that it cannot wait until the country has its own supply, as it’s been selling over 60% of its gas in Romania below market prices in the past four years. Scrapping the price cap, however, would make any government very unpopular overnight, as Romanians—who earn €1,076 a month on average—have been increasingly relying on cheap energy just to get by. To make it more difficult, the Romanian government resigned a few days ago over the ruling parties’ defeat in the first round of the presidential election, meaning that it’s going to take weeks or even months until a new government takes its place that can make such a decision.
