EU to propose crisis measures to curb soaring energy prices
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The European Union is set to unveil plans on Wednesday to skim windfall profits from energy companies and impose power consumption cuts across the bloc, in a package designed to protect citizens and businesses from soaring electricity prices. ‘energy.
European governments have already invested hundreds of billions of euros in tax cuts, aid and subsidies as they try to contain an energy crisis that is fueling record inflation, forcing industries to halt production and hike bills citizens before winter.
On Wednesday, the European Commission will try to layer this patchwork of national measures with a more coherent bloc-wide response, applying to all 27 EU member states.
A draft of the Commission’s plans, seen by Reuters, would cut excess revenue from non-gas-fired European power stations to raise funds that governments could spend to help businesses and citizens pay their bills.
Wind and solar farms and nuclear power plants would face a cap of 180 euros ($180) per megawatt-hour (MWh) on the revenue they receive for power generation, with governments clawing back any excess money and the recycling to support consumers, according to the project, which could still change before publication.
This would cap producer revenues at less than half of current market prices. Germany’s prior-year electricity price hit a record high of over 1,000 euros/MWh last month and was trading at over 400 euros/MWh on Tuesday.
Fossil fuel companies would also face a windfall levy to recoup what the Commission describes in the draft as ‘windfall profits’ linked to soaring oil and gas prices fueled by reduced gas deliveries by Russia following its invasion of Ukraine.
Oil, gas, coal and refining companies would be required to pay a “solidarity contribution” of 33% of their taxable excess profits from the 2022 financial year, according to the draft.
The Commission has backed out of an initial Russian gas price cap plan, however, and EU countries are divided on whether wider price caps would help or hurt Europe’s efforts to secure gas. energy supply in winter.
EU countries will have to negotiate the Commission’s proposals and agree on the final laws. With controversial caps on gas prices – at least for now – diplomats from some states were optimistic that deals could be struck at a meeting of EU energy ministers on September 30.
The draft EU proposal would also impose on countries a mandatory target of reducing electricity consumption by 5% during the 10% of hours when electricity demand is highest each month, with the aim of save fuel in the colder months.
Gas storage caverns in EU countries are now 84% full, exceeding the EU’s target before winter despite reduced gas deliveries from Russia to the bloc. But analysts say Europe will still need deep reductions in fuel consumption over the winter, to prevent stores from emptying.
Brussels is also working on emergency liquidity support plans to help energy companies facing a cash crunch, but EU officials said those measures would likely be released later than Wednesday.