EU energy ministers approve electricity price cap, demand reduction
European Union energy ministers agreed on September 30 on proposed regulation to address high energy prices, which includes electricity demand reduction and a price cap on electricity generation.
The ministers reached “political agreement” on a voluntary reduction target of 10 per cent of gross electricity consumption and a mandatory reduction target of five per cent of electricity consumption in peak hours, the Council of the EU said in a statement.
These targets will apply for the period December 1 2022 to March 31 2023, with member states identifying their own peak hours and “free to choose the appropriate measures to reduce consumption for both targets in this period,” the statement said.
The ministers also agreed to cap the market revenue from the sale of electricity to 180 euro a MWh, including intermediaries, for companies that use renewable, nuclear and lignite for electricity generation.
“Such operators have made unexpectedly large financial gains over the past months, without their operational costs increasing,” the statement said.
EU member states can use measures of their choice to collect and redirect the surplus revenues towards supporting and protecting final electricity customers, and will also have some flexibility concerning the measures being implemented.
“These include the possibility to set a higher revenue cap, use measures that further limit market revenues, differentiate between technologies, and to apply limits to market revenues of other actors including traders, among other things,” the Council statement said.
The mandatory cap on revenues will apply until June 3 2023.
Additionally, the energy ministers agreed to “set a mandatory temporary solidarity contribution on the profits of businesses active in the crude petroleum, natural gas, coal, and refinery sectors” and use the proceeds to provide financial support to households and companies affected by the high electricity prices.
This contribution would be calculated on taxable profits, as determined under national tax rules, that are above a 20 per cent increase of the average yearly taxable profits since 2018.
The regulation will be formally adopted by written procedure in early October. It will then be published in the EU’s Official Journal and enter into force on the next day, the statement said.
(Photo: John Mason/freeimages.com)
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