European Commission plan – Energy “arbitrary profits” should be redistributed

The same goes for “unexpected profits” from companies that do business with fossil fuels, von der Leyen said. The EU countries will now discuss this. “The goal is to influence the price of electricity, knowing that it is also affected by global conditions,” said von der Leyen. In concrete terms, the European Commission plans a price ceiling of 200 euros per megawatt hour for electricity that is not produced with gas. This is evident from a template from the authority that could see the Reuters news agency. In addition, the Commission wants Member States to reduce their electricity consumption by ten percent per month, based on the average consumption of the past five years. These proposals will be discussed on Friday.

“Exceptionally High Profits”
The First Vice-President of the European Parliament, Othmar Karas (ÖVP), sees the measures presented as absolutely the right step. “Energy suppliers and finance ministers are currently making extraordinarily high profits. This extra profit must be invested in emergency aid, in renewable energy and in infrastructure expansion,” Karas wrote on Twitter on Wednesday. Implementation must now be accelerated. The energy market must be reconsidered. model needed.

Green MEP Thomas Waitz sees a price ceiling and a solidarity contribution from fossil energy companies as good steps to counter the crisis. However, he is not completely convinced of the EU proposal: “I miss the push for a joint EU gas purchase and concrete proposals for the redistribution of corporate profits in society in order to secure social peace in Europe and no longer a toy of Putin’s threatening gestures,” Waitz said in a statement.

At present, the price of electricity in Europe is mainly determined by expensive gas-fired power stations, which are used to produce electricity due to the high demand (keyword: merit order, see graph below). Since the price of gas has risen sharply against the background of the war in Ukraine, electricity has also become more expensive. Other energy companies that produce electricity more cheaply – for example from wind, solar or nuclear energy – make big profits because they can also sell their electricity at the higher price. Some of these “chance profits” are skimmed off and used to relieve consumers.

Invest money and save electricity
But oil and gas companies also made big profits, von der Leyen said. “We will therefore propose a solidarity contribution for such companies.” Member States should use the proceeds from this to support particularly affected households and continue to invest in clean, domestic energy sources. As an additional measure against high electricity prices, von der Leyen suggested reducing electricity consumption in times of high demand. “We will propose a binding target to reduce electricity consumption during peak hours.”

At the same time, it is necessary to support energy suppliers, who are currently struggling with the enormous volatility in the markets, says von der Leyen. “We will update our state aid frameworks so that state guarantees can be issued quickly in the event of an emergency.” As a final measure, von der Leyen mentioned a price cap for Russian gas imports. “The goal here is very clear. We need to reduce Russia’s revenue, which Putin uses to finance his brutal war against Ukraine,” the politician said. EU energy ministers will meet on Friday to discuss options. could then submit a corresponding legislative proposal next Tuesday.

Putin threatens total energy boycott
Very little Russian gas has flowed to Europe via Ukraine and Turkey since Russia stopped deliveries via Nord Stream 1. The Russian president had previously threatened to stop gas supplies to Europe in the event of a gas price ceiling. “If political decisions are made that are contrary to the treaties, we simply will not honor them.” Putin said in a speech in Vladivostok that Russia would not supply gas, oil or coal if it conflicted with Russian interests.

The EU should not be impressed by this announcement, von der Leyen noted. Because there will be a “sooner or later” supply stop, Europe is working hard to become independent from Russian gas. Very little Russian gas has flowed to Europe via Ukraine and Turkey since Russia stopped deliveries via Nord Stream 1. Von der Leyen said Russian gas now accounts for only 9 percent of gas imports into the EU, up from 40 percent at the start of the war.