Legal changes regarding the electricity price cap for SME consumers

Government Emergency Ordinance 119/2022 (GEO 119/2022) amending and supplementing Government Emergency Ordinance no. 27/2022 (GEO 27/2022) was published in the Official Gazette of Romania no. 864 of 1st September 2022 and entered into force at the same date.

The main legislative changes:

As of 1 of September 2022, the caps on the final price of electricity invoiced to final consumers become applicable. According to the provisions of GEO 119/2022, the final price invoiced by electricity suppliers is capped to a maximum 1 Ron/kWh, with VAT included, for 85% of the average monthly consumption achieved at the place of consumption in 2021, in the case of small and medium enterprises.

The definition of small and medium enterprises

According to Law 346/2004 as amended and supplemented, small and medium enterprises are those enterprises which cumulatively fulfill the following conditions:

• have an average annual number of employees less than 250.
  
  
• achieve a net annual turnover of up to 50 million EUR, equivalent in RON, or have total assets that do not exceed the RON equivalent of 43 million EUR, according to the last approved financial statement. By total assets is meant fixed assets plus current assets plus advance expenses.

The above-mentioned criteria are applied to a single undertaking. The concept of a single undertaking takes into account the fact that the elements indicated above are analyzed cumulatively for 2 or more undertakings if they are linked or partner undertakings and are not autonomous.

A partner enterprise is defined as an enterprise that holds 25% or more of the share capital or voting rights (whichever is greater) in one or more undertakings or if one or more undertakings hold 25 % or more of the share capital or voting rights of the undertaking concerned.

Linked undertakings are defined as undertakings between which any of the following relationships exist:

1. an undertaking holds a majority of the voting rights of the shareholders or members of the other undertaking.
   
   
2. an undertaking shall have the right to appoint or revoke a majority of the members of the management, management or supervisory board of the other undertaking.
   
   
3. an undertaking is a shareholder or associate of the other undertaking and holds on its own, by agreement with other shareholders or members of that undertaking, a majority of the voting rights of the shareholders or members of that undertaking.
   
   
4. an undertaking shall have the right to exercise a dominant influence over the other undertaking by virtue of a contract concluded with that undertaking or a clause in its statutes.

Therefore, the dominant influence is defined by factual aspects, such as contractual relationships between companies or any other such aspects. As such, to find out if two or more companies are linked an analysis of existing contractual relationships is required.

Undertakings between which any of the relationships described above exist, through a natural person or group of natural persons acting by mutual agreement, are also considered to be linked if they carry out their activity or part of their activity on the same relevant market or on adjacent markets.

Given the factors above, to benefit from the price-cap introduced to GEO 27/2022, the undertaking must be an autonomous SME or, together with its partner or linked enterprises, must not exceed the thresholds established by the legal definition of SME.

For more information, please contact Băncilă, Diaconu și Asociații SPRL team.