Gas caps, consumer aid, taxes on profits that fell from the sky and supply guarantees. These are some of the axes of the proposal that the European Commission is preparing to intervene in the market in the face of the energy price crisis, which is transferred to homes and companies automatically. For later, at the beginning of 2023, the proposal to reform the electricity market is expected, which will focus on ending the automatic link between the most expensive energy and the electricity bill.
The deputy general director of the General Directorate of Energy of the European Commission, Mechthild Wörsdörfer, has given clues this Thursday before the Industry Commission of the European Parliament about the plans of the Community Executive: “There is an extraordinary Council of Energy Ministers next Friday 9. By then there is not much we can prepare except some factual updates: we will hear from Member States what they are doing on gas and electricity prices.”
“Meanwhile”, said the head of the Community Executive, “as requested by the European Council, we are already analyzing price caps: there are different forms of price caps, for example, for gas imports from Russia; maximum prices in the wholesale or retail market; maximum retail prices, which are already being applied. We are looking at all the possibilities, at full speed. In addition, we want to know the opinion of the Member States on all these issues, in particular on electricity prices, for which we are analyzing short-term measures, emergency measures to avoid these huge bills. But also how can we protect vulnerable consumers, but not only the most vulnerable consumers, but also middle-income households or industries. From there, work will be done on emergency measures, on electricity prices”.
Wörsdörfer has also anticipated that proposals may come on "the reduction of the demand for electricity". “We talk about reducing gas demand”, said the deputy director of the European Commission, “but it is very different. The gas and electricity markets are very different. We have gas storage; and with electricity there are daily peaks, but no storage. Therefore, it is a different type of action that we are looking at, and we are looking at the design of our electricity market. We have marginal prices, we are looking at how to reform it. But that takes time. President von der Leyen could not promise that from one day to the next, but it is certain that we will do a proper impact assessment and look at all the options with an open mind because we are in a very, very different situation than we were before. REPowerEU already mentioned that there is the possibility of looking at taxes on windfall profits. This is also in the pipeline, what we are looking at.”
In her appearance, the representative of the Community Executive has affirmed that in the speech of President Von der Leyen on September 14 on the State of the Union before the European Parliament “there will be a lot of energy and we will follow up on it. The situation in which we find ourselves now, both in gas prices and in the price of electricity, as well as the concern for the security of supply, is of the utmost concern and priority in the commission”.
“Regarding the issue of prices”, said Wörsdörfer, “the president will explain it in more detail on September 14, so in two weeks we are working on emergency measures. We are well aware that prices are affecting vulnerable consumers. So we have to help them. Member states are already doing a lot and we encourage them to do more. But there is no longer the issue of vulnerable households and industry, but also of average income. That is why we are seeing the security of the current supply, the regulation, the coverage, the protected clients. We are looking at critical industry, not covered by current security of supply regulation, that are struggling with high energy prices.”
The directive of the European Commission has continued: “The issue of price caps is something that we are analyzing, we will first listen to the extraordinary Energy Council on September 9. But then we will also come out after President von der Leyen's speech and the discussions with the European Parliament on what are the concrete options also for market design reform. We must reform our market design. We are very aware of that. But it can't be overnight, so we're looking at all options, even beyond what we might have done when we started to see what we can do to avoid the situation we find ourselves in. It is part speculation, but also part demand and supply. And we are working, as I said, on the supply side."
l“The situation is still quite critical”, he stated: “There is a very strong risk of interruption, which is increasing, since half of our Member States are totally or partially affected by interruptions. And as a result of that, 13 member states are partially or totally cut off from Russian gas. And the Nord Stream 1 from August 31, and for three days, will be stopped for maintenance. So there is no gas flow from Russia to Germany and the rest of Europe since yesterday because of Nord Stream 1. And we're also seeing the impact of that. There is good news in all this, and it is the storage of gas, which is on average in the EU at 80%. This is good news to help us prepare for this winter, we need to reduce gas demand and start making more savings as soon as possible to strengthen our preparation for next winter. And we have already started to identify some good practices from the Member States that have started to implement it, either by measures to cut lights or some other proposals for heating in offices. And we see this not only in Spain and some other parties, but negotiations are also ongoing in many of the member states and we are in close contact with them sharing those good practices based on the market and on the demand side that are can take to release volumes of gas.”