EU approves emergency measures to curb prices

The plan assumes mandatory energy savings and cap on company revenues

EU energy ministers on Friday approved their first package of emergency measures in response to the deepening energy crisis in the bloc driven by skyrocketing prices.

The package, negotiated in less than a month, includes mandatory power savings, a cap on excess market revenues and a levy to capture surplus corporate profits.

The plan prescribes a mandatory 5% target during peak hours, when gas plays a bigger role in price setting, and a voluntary 10% reduction in overall electricity demand.

It also suggests a cap on the excess revenue made by power plants that do not use gas to produce electricity, such as solar, wind, nuclear, hydropower and lignite. The cap will be uniform and set at €180 per megawatt-hour. All revenue that exceed the barrier will be collected by governments.

The ministers have also approved a so-called ‘solidarity mechanism’ to partially capture the surplus profits made by fossil fuel companies. Authorities will be able to introduce a 33% levy on the profits made by those companies in the 2022 fiscal year in case the profits represent a 20% increase compared to the average seen in the last three years.

The extra funds will be reportedly re-directed to households and companies under financial stress in the form of subsidies, reduced tariffs or income support.

READ MORE: Eurozone records first ever double-digit inflation

The Czech Republic’s minister for industry and trade Jozef Sikela told reporters ahead of the meeting that while the package is a decisive step, further action is needed. “We must not stop here. We are in an energy war with Russia. The winter is coming. We need to act now. Now means now,” Sikela was quoted as saying by euronews.

His French counterpart, Agnes Pannier-Runacher, echoed the call, stating “Let me be very clear: we will have to go much faster, much further and make other proposals.” 

The EU’s emergency package comes as inflation in the Eurozone hit double digits for the first time in the history of the single currency.

Find more stories on economy and finance in TROIB business