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EU energy ministers take aim at energy prices

September 9, 2022

European energy ministers are holding an emergency meeting in Brussels to debate measures on protecting consumers and businesses from soaring energy prices. Reaching agreement on a solution is likely to prove difficult.

 A picture of plugs in a wall socket
Electricity prices have risen along with gas pricesImage: Wilfried Wirth/CHROMORANGE/IMAGO

Energy ministers from the 27 member states of the European Union are meeting in Brussels on Friday to discuss a set of proposals aimed at combating rocketing power prices as winter looms.

The meeting comes as Russian gas deliveries to Europe have fallen by almost 90% in the past 12 months, with tensions over Moscow's invasion of Ukraine compounding the supply problem.

What are the proposals under discussion?

The president of the European Commission, Ursula von der Leyen, has put forward a number of suggestions for curbing energy prices for consumers and businesses in the bloc.

They include putting a price cap on Russian gas, imposing a cap on the profits of companies producing electricity without gas and implementing measures across the bloc to save power.

Von der Leyen has also proposed providing emergency liquidity to power companies facing supply problems amid the Russian gas cutoff.

Other proposals to be discussed by energy ministers include a so-called solidarity contribution from fossil fuel companies.

If energy ministers agree on how to tackle the rising electricity prices in the bloc, the Commission could put forward a legislative proposal as early as next week.

France's looming energy crisis

Why cap revenues from non-gas plants?

The price of electricity in Europe is set by the most expensive energy source needed for its production. This means that the current high prices have been determined by power plants that use gas — the cost of which has risen to 12 times its level at the beginning of 2021.

Von der Leyen said Wednesday that this leads to "enormous revenues" for renewable energy providers, who do not rely on gas for production.

However, Giles Dickson, CEO of industry group WindEurope, told German news agency dpa that most wind farms in Europe had fixed rates for selling their electricity and thus were not making windfall profits.

These producers should be exempt from any revenue levy, he said, adding that any measures introduced should maintain an environment where it "makes business sense" to invest in the expansion of renewables.

France, which derives much of its power from nuclear plants, has also questioned whether the cap should be applied to all producers.

What have ministers said?

Luxembourg's energy minister, Claude Thurmes, said ahead of the meeting that he believed agreement should be possible on the proposal for taking excess revenue from non-gas power generators and using it to cut energy bills for consumers.

 "One issue which is on the table where we will get consensus is this inframarginal levy ... We have to be flexible but I think it's the best way to collect this money from the market which is undue and bring it to consumers," Thurmes said.

"We are in an energy war with Russia," Czech Industry Minister Jozef Sikela said as he arrived at the meeting.

"We have to send a clear signal that we would do whatever it takes to support our households, our economies."

Speaking before the meeting, which he will not be attending, German Economy Minister Robert Habeck called for the rapid decoupling of the electricity price from the gas price.

He said cheaper forms of energy, particularly renewable energies, should be allowed to benefit consumers without destroying market mechanisms.

Hungary, which is highly dependent on Russian gas and has expanded its imports, has meanwhile said it is opposed to any price cap on gas from Russia, saying it would go against European and Hungarian interests.

Foreign Minister Peter Szijjarto said in a Facebook video that a price cap would lead to an immediate stop to the delivery of Russian gas.

Germany's Habeck said he was in favor of a price cap on Russian gas, but only if countries such as Hungary were on board with the idea, adding, however, that Germany could now manage without Russia's deliveries.

Europe needs to reduce energy demand: researcher

tj/wmr (dpa, Reuters)