Monday, September 26

Brussels proposes limiting the benefits of electricity companies to help families and companies in the face of the energy crisis

Limits on benefits, aid for families and companies, reducing electricity consumption at peak times and putting a cap on the price of gas that comes from Russia. These are some of the concrete measures that the president of the European Commission, Ursula von der Leyen, has outlined this Wednesday with a view to addressing the energy crisis, skyrocketing electricity bills and Russian gas cuts when Europe heads towards winter . “It is important for us to influence the general price of gas in such a way that it does not continue to skyrocket”, said Von der Leyen: “We have energy shortages all over the world and therefore the pressure on the energy markets is enormous . That is why we also want to subtract some of the excess profits from the energy companies and make them available to citizens who cannot afford this adjustment. But also companies that, for example, find it difficult to protect themselves from high energy costs. Therefore, the objective is to influence the price of electricity, knowing that it is also influenced by global circumstances. The cap on Russian gas will certainly be discussed in detail in the Council of Ministers [de Energía este viernes]and our proposal will arrive on Tuesday.”

Russian President Vladimir Putin He has already branded the idea as “nonsense” to put a cap on the price of Russian gas, something that the G7 also defends.

Von der Leyen has released his proposals for the short term, for intervention in the market urgently, 48 hours before the EU energy ministers meet in Brussels to discuss precisely what measures to take. Unlike governments like the Spanish, for example, the European Commission, for now, separates this package of urgent measures from the market reform, which it prefers to leave for early 2023. That reform would go through decoupling the price of the most expensive energy –the gas– from the electricity bill.

“We are facing an extraordinary situation, because Russia is an unreliable supplier and is manipulating our energy markets,” said the German: “We have increased our preparation and weakened Russia’s control over our energy supply by reducing the demand, which has allowed our reserves to be at 82%. Through diversification, we have increased deliveries of liquefied natural gas or pipeline gas from the US, Norway, Algeria, Azerbaijan and others. For example, Norway now delivers more gas to the EU than Russia. And we are making big investments in local renewable energies through the RePowerEU instrument”.

Von der Leyen has recognized that “the manipulation of the gas markets has an indirect effect on the electricity market”, which is why Europe faces astronomical electricity prices for homes and businesses, as well as enormous volatility in the market”.

Consequently, the European Commission proposes “a set of immediate measures to protect vulnerable consumers and businesses”.

In the first place, the president of the Community Executive has spoken of “intelligent saving of electricity. That is to say: ”The world’s energy supply is scarce, which requires an intelligent reduction in demand. We need a strategy to flatten the spikes that drive the price of electricity.” Thus, Von der Leyen has announced: “We will propose a mandatory target to reduce the use of electricity in peak hours.” According to El País, that reduction target could be at least 5%. Commission sources, however, say that “now is not the time to give numbers, but to wait to hear from the Member States on Friday and, from there, we will give our numbers next week.”

“Secondly”, said the president of the European Commission, “we will propose a cap on the income of companies that produce electricity at low cost [como las renovables]. low carbon energy sources [las menos contaminantes] they are generating unexpected income, which does not reflect their production costs. The time has come for consumers to benefit from the low costs of low-carbon energy sources, such as renewable energies. Therefore, we will propose to redirect these windfall profits to help vulnerable people and businesses.”

But these caps are not only for renewables. Von der Leyen has stated: “The same goes for windfall profits from fossil fuel companies. Oil and gas companies have also made massive profits. Therefore, we will propose a solidarity contribution for fossil fuel companies. Because all energy sources must help to deal with this crisis. And Member States should invest this revenue to support vulnerable households and invest in clean energy sources.”

Fourth, “energy trading companies must receive support to deal with market volatility. They are currently being asked to provide unexpectedly large amounts of funds, threatening their ability to trade and the stability of future markets. Thus, we will help boost liquidity support by Member States for energy companies: we will update our temporary framework to allow state guarantees to be delivered quickly”.

In fifth place, Von der Leyen has asked to limit Russian gas: “The objective here is very clear. We must cut Russia’s income, which Putin uses to finance this vicious war against Ukraine. At the start of the war, Russia’s pipeline gas accounted for 40% of all imported gas. Today it has been reduced to only 9% of our gas imports.”







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