EU adopts emergency measures to reduce energy prices
Electricity plug
(BRUSSELS) - EU states formally adopted a regulation Thursday on an emergency intervention introducing common measures to reduce electricity demand and redistribute the energy sector's surplus revenues.
The Council regulation sets a voluntary overall reduction target of 10% of gross electricity consumption and a mandatory reduction target of 5% of the electricity consumption in peak hours. Member states will identify 10 % of their peak hours between 1 December 2022 and 31 March 2023 during which they will reduce the demand. Member states will be free to choose the appropriate measures to reduce consumption for both targets in this period.
The Council agreed to cap the market revenues at 180 euros/MWh for electricity generators, including intermediaries, that use so-called inframarginal technologies to produce electricity, such as renewables, nuclear and lignite. Such operators have made unexpectedly large financial gains over the past months, without their operational costs increasing. This is because of the role of coal and gas as price-setting marginal sources that currently inflate the final price of electricity.
Member states agreed to use measures of their choice to collect and redirect the surplus revenues towards supporting and protecting final electricity customers. Member states introduced some flexibilities to reflect their national circumstances and the measures in place at national level. 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.
Where a member state's net import dependence is equal or higher than 100%, they shall conclude an agreement by December to share the surplus revenues adequately with the exporting member state. Other member states are also invited to conclude such agreements.
The Council regulation sets a mandatory temporary solidarity contribution on the profits of businesses active in the crude petroleum, natural gas, coal, and refinery sectors. The solidarity contribution will be calculated on taxable profits, as determined under national tax rules in the fiscal year starting in 2022 and/or in 2023, which are above a 20% increase of the average yearly taxable profits since 2018. The solidarity contribution will apply in addition to regular taxes and levies applicable in member states.
Member states may temporarily set a price for the supply of electricity to small and medium-sized enterprises to further support SMEs struggling with high energy prices. Member states also agreed they may exceptionally and temporarily set a price for the supply of electricity which is below cost.
The agreemnents stresses that the measures are temporary and 'extraordinary in nature'. They will apply from 1 December 2022 to 31 December 2023. The reduction targets of energy consumption shall apply until 31 March 2023. The mandatory cap on market revenues shall apply until 30 June 2023.
The regulation will now be published in the EU's Official Journal and enter into force on the next day.
Regulation on an emergency intervention to address high energy prices