In a first draft of emergency measures against the high electricity prices, the European Commission advises against an EU-wide gas price cap. The Brussels authority has analyzed a number of measures, including an extension of the gas price cap in Spain and Portugal to all of Europe, according to the draft available to the German Press Agency.
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“Most of these options would not be suitable because they would lead to an increase in electricity and gas demand and would pose a risk to the security of electricity supply.”
Specifically, the Commission makes three proposals: First, the demand for electricity should be reduced in a coordinated manner, similar to the gas savings targets of the EU. Second, the wholesale price of electricity produced from cheaper sources than gas – such as wind, solar, nuclear or coal – could be capped.
Third, countries could collect and redistribute electricity companies’ profits that exceed this price cap to consumers – similar to an excess profits tax that the proposed measure would replace.
The Commission cites direct payments to consumers, a reduction in surcharges and other interventions in retail prices as examples of redistribution.
Due to the high demand, the price of electricity in Europe is currently given primarily by expensive gas-fired power plants that are used to produce electricity. Other energy companies that produce cheaper electricity, for example from the sun, make big profits because they can also sell their electricity at the higher price.
MEP Michael Bloss (Greens) commented that the Commission finally dared to tackle energy companies’ excess profits. “We are finally creating the basis for the urgently needed European energy money.”
His colleague Markus Ferber (CSU), on the other hand, complained that the authority could not offer a quick solution to limiting electricity prices without jeopardizing the security of supply. “Saving electricity alone is not enough,” he said.