EU proposals to reduce tariffs

Denial of profits of energy companies, involving oil and gas groups… Ursula von der Leyen presented the Commission’s methods.

The European Commission on Wednesday detailed its proposals to prevent the increase in gas and electricity prices, mainly by preventing “profitsof energy groups and reducing consumption in the EU at peak times. EU energy ministers will vote on these proposals at an extraordinary meeting on September 30 in Brussels.

Income from the cap

In the European electricity market, the cost price of the last source of electricity mobilized to meet demand – usually a gas-fired power station – determines the price imposed by all operators: the wholesale price of electricity therefore surged along with the surge in gas prices, after the war in Ukraine.

The Commission proposes to cap the revenues of electricity producers from nuclear and renewables (wind, solar, hydroelectric), which reap the profits “remarkableby selling their production at a price higher than their cost of production.

According to a draft text consulted by AFP, the Commission proposes to set this ceiling at 180 euros / megawhatth hour. The difference between this level of income and the wholesale market price is recovered by the States to be distributed to households and businesses. Coal and methane are excluded from the mechanism.

This cap may possibly be raised”more than 140 billion euros“, assured on Wednesday the President of the Commission Ursula von der Leyen. Apart from the current energy crisis, it promises structural reform “in depthin the electricity market.

Mana can vary greatly depending on the country, with a more diverse energy mix. In France, the profits from nuclear power, through dividends from EDF, and from renewable energy, through fixed-price sales contracts entered into by operators, are already in the majority of the State.

“Contribution” to oil and gas groups

Brussels wants to admita temporary contribution to unityto the producers and distributors of gas, coal and oil, which are profitable due to rising prices. “These big companies must pay a fair share, pay a contribution to the crisis“, explained Ms. von der Leyen.

According to the project consulted by AFP, it will be set at 33% of super profits (profits more than 20% higher than the average for the years 2019-2021). On the other hand, Brussels is careful not to talk about “taxes“, because any tax provision requires the concurrence of the Twenty-Seventh, a more complicated and risky procedure than adopting a qualified majority.

Reduce demand at peak times

According to its draft, the Commission wants to set a binding target for States to reduce their electricity least 5%during the set number of peak hours when electricity is the most expensive. According to Brussels, this will reduce gas consumption to produce electricity by 3.8%.

The European executive also called on the 27 to reduce their monthly consumption by 10%, an indicative target.

Each country chooses how to get there, for example by “auction systems» providing producers with financial compensation in exchange for reduced consumption.

Support cash-strapped suppliers

Brussels wants to support energy suppliers who are experiencing a severe lack of liquidity in the face of price volatility, by easing the regulatory framework and instituting anti-speculation mechanisms to limit fluctuations- also in the market.

We will amend the Temporary Framework for State aid measures in October, to allow the provision of State guarantees“, Ms. von der Leyen announced on Wednesday.

Set the price of gas?

In its first tracks, the Commission initially considered capping the price Russia pays for its gas deliveries to the EU, in order to further reduce the Kremlin’s profits – an idea that has been strongly opposed in the eastern states. , which is still dependent on Russian hydrocarbons.

On the other hand, the ministers of the Twenty-Seven asked Brussels on Friday to study the possibilities of capping the price of all gas imports from the EU, regardless of its origin – including liquefied natural gas (LNG), which Europe pays much higher. price than in Asia.

But the EU must remain a sufficiently attractive market for LNG suppliers, who can easily find other customers elsewhere, warns the Commission, which is wary of this strongly divisive topic. in Member States.

SEE ALSO – Electricity: The EU wants to limit the profits of energy producers

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