September 14, 2022
The Commission is proposing emergency intervention in European energy markets to address recent price rises. These measures follow on from those previously agreed on filling gas storage and reducing gas demand to prepare for the coming winter.
The first response to high prices is to reduce demand. To target the most expensive hours of electricity consumption, when gas-fired electricity generation has a significant price impact, the Commission proposes an obligation to reduce electricity consumption by at least 5 % during the selected peak price hours. Member States will be required to identify the 10% of the hours with the highest expected price and reduce demand during those peak price hours. The Commission also proposes that Member States should aim to reduce overall electricity demand by at least 10% by 31 March 2023.
The Commission also proposes a temporary revenue cap for "infra-marginal" producers of electricity, i.e. technologies with lower costs, such as renewables, nuclear and lignite, which supply electricity to the grid at a cost below the price level set by more expensive "marginal" producers. The Commission proposes to set the cap on infra-marginal revenues at EUR 180/MWh. Revenues above the cap will be collected by Member State governments and used to help energy consumers reduce their bills. Member States trading in electricity are encouraged to conclude bilateral agreements to share part of the infra-marginal revenues collected by the producer State for the benefit of end-users in the Member State with low electricity production. These agreements shall be concluded no later than December 1, 2022 when a Member State's net electricity imports from a neighboring country are at least 100%.
Third, the Commission also proposes a temporary solidarity contribution on windfall profits generated by activities in the oil, gas, coal and refining sectors that are not covered by the infra-marginal revenue cap. It would be levied by member states on 2022 profits that exceed the average profits of the previous three years by more than 20%. Member states would collect the revenues and redirect them to energy consumers, in particular vulnerable households, severely affected businesses and energy-intensive industries. Member States may also finance cross-border projects in line with the REPowerEU targets, or use part of the revenues for the common financing of measures to protect employment or promote investments in renewable energy and energy efficiency.
In a new intervention in electricity market rules, the Commission also proposes to extend the available Energy Price Package to help consumers. The proposals would authorize below-cost regulated electricity prices for the first time and extend regulated prices to include small and medium-sized enterprises as well.
