Romanian BRM exchange mulling ECJ lawsuit against regulator amid claims of EU Treaty breach

LONDON (ICIS)–The Romanian energy exchange BRM is considering a lawsuit against the EU’s directorate-general for energy (DG Energy) amid growing frustrations over failure to ensure local institutions uphold EU rules.

In a statement to ICIS, BRM said it could file the suit to the European Court of Justice in Luxembourg as early as next month if DG Energy fails to take action against the local Romanian regulator ANRE.

BRM said ANRE is obliged to implement an EU regulation adopted in January 2020 which requires member states to guarantee competition in electricity markets.

However, the exchange says the regulator has so far failed to implement the regulation and refused to grant a licence to BRM to operate a centralised electricity market on its platform.

BRM said it had approached DG Energy with several requests to intervene but has so far received no answers.

Speaking to ICIS, BRM president Gabriel Purice said if the exchange did not receive any resolution from DG Energy by the end of the month it would file the case to the ECJ.

It would be the second lawsuit involving the watchdog after the Luxembourg court ruled in an earlier case in September 2020 that the monopoly of the state exchange OPCOM over the electricity market, which is upheld by ANRE, was in breach of the EU’s Treaty principles. These relate to the free movement of goods, in this case electricity, and the freedom to provide trading services.

COURT OF APPEAL

Last November BRM, which operates a centralised gas market, filed a lawsuit to the Bucharest Court of Appeal against ANRE for failing to issue a licence to run a centralised market for electricity, effectively upholding the monopoly of state-owned bourse OPCOM. The first hearing has been scheduled for 17 February, BRM said.

Purice pleaded with the ministry of energy to force the implementation of the EU regulation if ANRE refuses to do so. Under Romanian law, the ministry can push through emergency procedures to guarantee the implementation of EU rules.

If the ministry fails to take action, the EU’s directorates general for energy and competition should start infringement procedures against Romanian authorities, Purice said.

“It’s frustrating to be in a position to address a claim against your own government and to expect to obtain legal redress outside your country because local authorities fail to understand that a competitive market is beneficial to the market itself and to its final consumers,” Purice said.

The ministry of energy had not responded to questions by publication time.

ANRE UNDER FIRE

ANRE and OPCOM have attracted a wave of domestic and international criticism from BRM as well EVIA-LEBA (European Venues & Intermediate Associations/London Energy Brokers’ Association) and EFET (European Federation of Energy Traders) for failing to implement EU rules requiring member states to guarantee competition among electricity market operators.

Since 2009, when the government introduced an obligation for producers to sell electricity on OPCOM which was subsequently extended to include all national wholesale electricity transactions, other competing trading platforms – such as brokers or exchanges – have been banned from offering services.

This meant that OPCOM has held a monopoly over all electricity transactions even as the European Parliament passed a regulation in 2019 obliging member states, including Romania, to ensure competition among electricity market operators.

REQUEST REFUSED

Following the adoption of the EU regulation in January 2020, BRM approached ANRE with a request to issue a licence to operate a centralised market for electricity but its application was turned down.

ANRE had sought to justify its decision to uphold OPCOM’s electricity market monopoly by arguing such a measure would minimise the risk of potentially corrupt practices and would guarantee security of supply. The watchdog also used a Commission regulation of 2015, which said under a member state’s national law a single entity may carry out day-ahead and intraday trading services, to declare OPCOM the nominated electricity market operator (NEMO).

However its arguments were dismissed by EVIA-LEBA, which suggested this provision could not be extended to medium- and long-term electricity trading and derivative services.

EVIA-LEBA as well as EFET further argued the best way to minimise the risk of corrupt practices was to guarantee optimal supervision and not consolidate the monopoly of an exchange over the market. But their calls were left unanswered.

Now, as BRM plans its potential lawsuit, EVIA-LEBA and EFET have again called on the Commission to investigate the issue and to impose an immediately enforceable injunction against OPCOM and ANRE.

ANRE had not replied to questions from ICIS by the end of Monday.

COMMISSION RESPONDS

ICIS reported the issue extensively last month, requesting ANRE, OPCOM, and the Commission to reply to questions regarding concerns related to ANRE and OPCOM’s breach of competition rules.

Neither ANRE nor OPCOM replied at the time.

The commission did reply after initial publication of the article to say: “The Commission confirms that it has received complaints concerning this issue and is currently assessing them in line with its procedures.

“More generally, the Commission has ongoing contacts with the Romanian authorities to ensure compliance of Romanian legislation regarding power exchanges with EU law, also following the [Luxembourg] Court ruling of 17 September 2020.

“The Commission takes note of the Court ruling which clarified that national rules requiring electricity producers to offer for sale all the electricity available to them on the platforms managed by the only operator designated for national electricity market trading services, constitute a measure having equivalent effect to a quantitative restriction on exports.”

DG Energy had not responded to a new set of questions from ICIS by the end of Monday, 18 January.