Title: EU to propose crisis measures to curb energy price spike
September 14, 2022 02:56 AM ET
The European Union is expected to unveil plans Wednesday to cut windfall profits for energy companies and impose cuts in electricity consumption across the bloc as part of a package of measures to protect citizens and businesses from soaring energy prices.
European governments have already spent hundreds of billions of euros on tax cuts, subsidies, and grants to try to contain an energy crisis that is fuelling record inflation, forcing industries to shut down production and driving up citizens' bills ahead of winter.
On Wednesday, the European Commission will try to superimpose a more coherent bloc-wide response applicable to all 27 EU member states on top of this patchwork of national measures.
A draft version of the Commission's plan, seen by Reuters, calls for taking excess revenues from Europe's non-gas-fired power plants to allow governments to free up funds to help businesses and citizens pay their bills.
This would cap generator revenues at less than half of current market prices. The price of electricity in Germany reached a record high of more than 1,000 euros/MWh last month and was over 400 euros/MWh on Tuesday.
EU countries will have to negotiate the Commission's proposals and agree on the final laws. With the gas price cap off the table, at least for now, diplomats from some states were optimistic that an agreement could be reached at the meeting of EU energy ministers on September 30.
The EU's draft proposal would also impose a mandatory target for countries to reduce electricity consumption by 5 percent during the 10 percent of hours with the highest electricity demand each month, in order to save fuel during the coldest months.
Gas storage tanks in EU countries are now 84% full, exceeding the EU's pre-winter target, despite reduced gas deliveries from Russia. But analysts say Europe will still need to cut back significantly on fuel consumption over the winter to keep the reserves from running out.