The European Commission has advised against an EU-wide gas price cap. It would lead to an increase in the demand for electricity and gas and pose a risk to the continuity of the electricity supply. Instead, the Brussels government recommends energy-saving measures and the redistribution of energy profits.
This has been laid down in a draft after the European Commission analyzed various measures. “Most of these options would not be suitable as they would increase the demand for electricity and gas and pose a risk to the security of electricity supply,” the text reads. This means, among other things, extending the gas price ceiling in Spain and Portugal to the whole of Europe. Instead, the EU authority relies on electricity-saving measures and wants to redistribute some of the profits of energy companies.
Price cap and redistribution
Three proposals are detailed in the draft: First, electricity demand should be reduced in a coordinated manner, similar to the EU’s gas-saving targets. Second, the wholesale price of electricity produced from cheaper sources than gas could be limited. These include renewable energy sources such as wind and solar, as well as nuclear power and coal.
Third, countries could collect the profits of electricity companies that exceed this price cap and distribute it among consumers. That would work in the same way as an excess profit tax, which aims to replace this measure. Examples of this are direct payments to consumers, the reduction of surcharges and other interventions in the retail price.
Due to the high demand, the price of electricity in Europe is currently mainly determined by expensive gas-fired power stations. Other energy companies make big profits because they produce electricity cheaper, but can also sell it at a higher price.
Energy ministers meeting next week
The discussion paper will be discussed at a meeting of energy ministers next week. EU Commission President Ursula von der Leyen could then make a concrete proposal on 14 September.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
