European Union wants to cap energy producers’ revenues and Russian gas prices

Brussels presented on Wednesday its plans to reduce the energy bills of Europeans, proposing to cap the price of Russian gas imported by the EU, and the revenues of electricity producers based on nuclear and renewable energy, while taking a share of the profits of gas and oil groups.

“Households and businesses are facing astronomical prices and enormous volatility in the market” for electricity, whose tariffs are indexed to gas prices, European Commission President Ursula von der Leyen noted at a press conference.

Some electricity producers, who mobilize nuclear power plants, wind, solar or hydroelectric dams, “make massive revenues that do not reflect their production costs,” which are “low,” von der Leyen lamented.

She called for a redistribution of these “windfall profits” to help “vulnerable” households and businesses.

The Commission is also aiming for “smart demand reduction,” with “a mandatory target to reduce electricity consumption at peak times.”

Gas and oil producers and distributors, who are making “massive profits” from soaring world prices, are also in Brussels’ sights.

“We will propose a solidarity contribution for fossil fuel companies, because all energy sources must contribute to solving this crisis,” said the president of the European executive.

Member states could use this financial windfall to help consumers but also invest in clean energy sources.

Brussels is also proposing to cap the price of gas delivered to the EU by Russia, in order to “reduce the revenues” used by the Kremlin to “finance this atrocious war against Ukraine.”

Earlier Wednesday, Russian President Vladimir Putin warned that his country would no longer deliver oil or gas to countries that would cap the prices of hydrocarbons sold by Moscow.

👉You might appreciate  Elected Monday, Liz Truss takes office Tuesday

“At the beginning of the war, Russian gas by pipeline represented 40% of all gas imported (by the EU). Today, it represents only 9%,” said Ursula von der Leyen.

Czech Trade and Industry Minister Jozef Sikela, whose country holds the rotating presidency of the EU Council, criticized the idea of a ceiling on Russian gas prices.

“This is not a constructive proposal. It is more another form of sanction against Russia than a real solution to the energy crisis in Europe,” he said, calling for a rapid decoupling of electricity and gas prices.

Brussels is also proposing a support mechanism for energy suppliers lacking liquidity in the face of wildly volatile global markets, updating EU regulations to allow member states to quickly provide public guarantees to affected companies.