The European Commission is proposing to cap part of wholesale electricity prices, adopt regulated tariffs for the most vulnerable and strengthen incentives to reduce consumption, according to a draft consulted Friday by AFP.
The European executive announced on Monday that it was preparing “an emergency intervention” on the electricity market to limit the surge in bills for households and businesses, while working on “a structural reform” to decouple electricity prices from gas prices, which have soared with the war in Ukraine.
In a document that will be examined on September 9 by the European energy ministers in Brussels, the Commission details three possible emergency measures, starting with a cap on wholesale prices for certain sources of electricity.
Currently, on the European market, the cost price of the last source of electricity mobilized to meet demand at any given time determines the price imposed on all operators on the continent: this is often a gas-fired plant.
The other energy sources (renewable, nuclear, coal) sell the electricity they produce at a price indexed to gas prices, much higher than their operating costs: Brussels therefore proposes to cap the price paid to these plants, to put an end to the windfall profits earned by energy companies.
In return, Member States could “reap additional financial revenues” (different in each country depending on its energy mix), which they could use to support the most vulnerable consumers: direct aid, regulated tariffs, reductions in electricity bills.
This is the second measure recommended. “Less than half of the states use regulated tariffs, while direct income support remains the most used instrument in the EU to support households,” notes the Commission, which wants to “provide a greater degree of legal certainty to extend regulated tariffs (…) notably with the possibility of a clear derogation (from EU rules) to cover also SMEs.”
On the other hand, the European executive says it is opposed to an undifferentiated cap on retail prices for all consumers, “an interventionist policy measure that risks distorting markets” and costing states dearly.
Finally, in line with the plan adopted in July to reduce the EU’s gas consumption, Brussels is proposing to intensify incentives to reduce electricity demand, in particular by paying consumers who restrict their needs, or through calls for tenders awarding industrialists compensation in exchange for a given reduction in their consumption.
