EU Unveils Crisis Measures to Tackle Energy Price Spike

The European Commission's new "emergency intervention" plan aims to tackle the soaring energy costs for both households and businesses across the European Union (EU) through exceptional electricity demand reduction measures. The plan also seeks to redistribute the energy sector's surplus revenues to final customers.

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It proposes an obligation to reduce electricity consumption by at least 5 percent during selected peak price hours, and expects the member states to aim to reduce overall electricity demand by at least 10 percent until March 31, 2023.

EU Energy Commissioner Kadri Simson said that the new measures will reduce pressure on prices across the EU, alleviate security of supply concerns and reduce the risk of blackouts or rationing.

The Commission is also proposing a European mechanism for collecting and redistributing the energy sector's surplus revenues to final customers and a temporary revenue cap on "inframarginal" electricity producers, which are providing electricity to the grid at a cost below the price level set by the more expensive "marginal" producers.

"An EU-wide cap at 180 euros per megawatt hour on revenues from different technologies like renewables, nuclear energy and lignite will generate funds that can be channeled to support consumers," Kadri explained.

The EU executive is also proposing the introduction of an "exceptional solidarity contribution" from the fossil fuel sector. The affected oil and gas companies would have to give up at least 33 percent of their profits that are over 20 percent above the average profits of the previous three years. This would also be used to finance relief measures for consumers and companies.

"We believe that this is fair and proportionate, leaving a margin for future investment," she said, adding that individual member states will be in charge of collecting the revenues and channeling them into consumers' support measures and investments related to the energy transition.

The Commission is also taking action to prevent the energy crisis from turning into a financial market crisis and to preserve the level playing field in the Single Market.