In a speech delivered today, the President of the European Commission Ursula von der Leyen, mentioned five immediate measures in a response to “the Russian manipulation of the gas market [which] has spillover effects on the electricity market”, leading to “astronomic electricity prices for households and companies”, but also to “an enormous market volatility”.
Smart savings of electricity “We have to save electricity, but we have to save it in a smart way. If you look at the costs of electricity, there are peak demands. And this is what is expensive, because, in these peak demands, the expensive gas comes into the market. So what we have to do is to flatten the curve and avoid the peak demands. We will propose a mandatory target for reducing electricity use at peak hours. And we will work very closely with the Member States to achieve this.”
Capping the revenues for low costs producers The EU will propose a cap on the revenues of companies that are producing electricity with low costs. “The low-carbon energy sources are making in these times – because they have low costs but they have high prices on the market – enormous revenues. Revenues they never calculated with; revenues they never dreamt of; and revenues they cannot reinvest to that extent. These revenues do not reflect their production costs. So, it is now time for the consumers to benefit from the low costs of low-carbon energy sources like, for example, the renewables. We will propose to re-channel these unexpected profits to the Member States so that the Member States can support the vulnerable households and vulnerable companies.”
Capping the revenues for fossil fuel companies Oil and gas companies have also made massive profits. “Therefore, we will propose that there is a solidarity contribution for fossil fuel companies, because all energy sources must help to overcome this crisis. Member States should invest these revenues to, as I said, support vulnerable households and vulnerable companies, but also to invest them in clean home-grown energy sources, as the renewables are, for example.”
State guarantees for the energy utility companies They must be supported to be able to cope with the volatility of the markets. “Here, it is a problem of securing futures markets. And for that, liquidity is needed. These companies are currently being requested to provide unexpected large amounts of funds now, which threatens their capacity not only to trade, but also the stability of the futures markets. It is a liquidity problem. Therefore, we will help to facilitate the liquidity support by Member States for energy companies. We will update our temporary framework and enable thus state guarantees to be delivered rapidly.”
Lowering the costs of gas The EC will propose a price cap on Russian gas, with the objective “to cut Russia’s revenues, which Putin uses to finance his atrocious war in Ukraine”.
The five measures announced by Ursula van der Leyen will be discussed with the Member States at the informal Energy Ministers Council on Friday.