EU proposes targeted cap

The European Commission is proposing a price cap for certain electricity producers, more regulated tariffs for SMEs and the most precarious households, and incentive measures to reduce consumption, according to a draft consulted by AFP.

“Part of the excessive profits that electricity producers are reaping today (…) must be used to support low-income consumers and vulnerable businesses,” Commission President Ursula von der Leyen said on Friday. of a speech in Bavaria (southern Germany).

The European executive is working on “structural reform” to decouple electricity prices from gas prices, which soared with the war in Ukraine, but for the time being, he has drawn up a list of three possible measures urgently to limit the surge in bills, in a document which will be examined on September 9 by European energy ministers.

First, the Commission recommends targeted intervention in the wholesale electricity market. Currently, it is the cost price of the last source of electricity mobilized to meet demand at any time, which determines the price imposed on all European operators: yet it is often a power station gas.

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The other sources (renewable, nuclear, coal) sell the electricity they produce at a price indexed to gas prices, much higher than their operating costs. Brussels is proposing to cap the price paid to these power stations, to restrict the windfall profits of energy companies.

In return, Member States might “reap additional financial revenue” (different in each country depending on its energy mix), which they might use to support the most vulnerable consumers: direct aid, regulated tariffs, reductions in electricity bills . This is the second recommended measure.

“Less than half of the States use regulated tariffs, while direct aid to households remains the most widely used instrument in the EU”, notes the Commission, which wants to “provide a greater degree of legal certainty to extend regulated tariffs (…) in particular with a clear derogation (from European rules) to also cover SMEs”.

“In a context where the supply of gas is tight, there is a risk that consumers will switch from using gas to electricity (for example, electric heaters) and worsen the situation”, warns the Commission. .

On the other hand, the European executive says it is once morest an indiscriminate cap on retail prices for all consumers, “an interventionist policy which risks distorting the markets” and costing states dearly. It is also positioned once morest uniform support for thermal power plants or reimbursement of the contribution of energy companies to the carbon market.

Finally, in line with the plan adopted in July to reduce European gas consumption, Brussels is proposing to intensify the incentive measures to reduce the demand for electricity, in particular by remunerating consumers who limit their needs, or via calls for offer awarding manufacturers compensation in exchange for a given reduction in their consumption.

These proposals, not yet made public, have already been applauded by Spain, which benefits from a derogation to cap electricity prices due to a limited connection to European networks: “We welcome the fact that these measures , highly contested in the past, are now on the table,” reacted the Spanish Ministry for Ecological Transition.

With MAP