October 1, 2022

Taylor Daily Press

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The commission takes into account the price ceiling for "green" electricity

The commission takes into account the price ceiling for “green” electricity

In order to reduce energy bills, the European Commission is developing a plan to separate the price of electricity from the price of gas.

European Commission officials are working overtime to make it work emergency mechanism Early this week, Commission President Ursula von der Leyen announced a cut in soaring energy prices for consumers.

A leaked unofficial paper shows that the commission wants to pull different leads. One way is to cut profit margins from energy companies that generate electricity from the sun, wind or nuclear power plants. Today, its price is calculated on the basis of gas as the most expensive source of energy, although its production costs are much lower. As a result, they reap huge profits.

The plan is to separate the price of electricity from the price of gas, and to introduce a cap on the price of electricity from wind, solar or nuclear power. National governments should use this revenue to lower electricity bills for citizens and businesses.

Details on how to do this are yet to be clarified. What these power companies get from electricity and where the maximum price is, will be determined in consultation with national regulators – depending on the energy mix, which varies widely among the 27 member states. This has the advantage that it can be implemented relatively quickly.

The leaked document dates back about ten days and has since been updated. But the great trend remains.

Enter on demand

In addition, a plan to reduce electricity demand in the European Union is also planned, in line with the agreement already reached by member states in July to reduce natural gas demand by 15% by March 31, 2023.

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Intervention in the gas market is also being considered. For example, the option of a Russian gas price ceiling is still on the table.

There is still no standard proposal. There is great pressure on the commission to put forward concrete proposals for the special meeting of energy ministers next Friday in Brussels. But it is also possible that von der Leyen will only offer pure wine during her State of the European Union address in Strasbourg on September 14. It also plans to submit a proposal early next year for a structural reform of electricity market pricing.