The energy ministers of the European Union reached this Friday in Brussels an agreement on an emergency intervention in the face of the rise in energy prices, which includes a solidarity contribution on the exceptional benefits of companies in the energy sector.
The regulation, proposed this month by the Commission and which today received the political backing of the 27, provides for a taxation of 33% of excess profits of fossil fuel companies, to convert it into a “solidarity contribution” to be redistributed to the most vulnerable, a ceiling on the profits of companies that produce electricity with low costs (renewable), and plans to reduce electricity consumption, voluntary (10% for general demand), and mandatory (5% in hours of greater consumption).
Bloomberg reports that the European Union hopes that the ceiling on the sale price of electricity produced from renewable and nuclear sources and taxes on the profits of fossil fuel companies will allow the collection of 140 billion euros.
⚡️ #TTE Energy | AGREEMENT!???? Ministers reached political agreement on measures to mitigate high electricity prices: mandatory electricity demand reduction, cap on market revenues from inframarginal electricity producers, and solidarity contribution from fossil fuel producers. pic.twitter.com/BLU4fxWNWj
— EU2022_CZ (@EU2022_CZ) September 30, 2022
“Wake up! Ministers reached a political agreement on measures to mitigate high electricity prices: mandatory reduction of electricity demand, limitation of market income of inframarginal electricity producers and solidarity contribution of fuel producers fossils”, announced the current Czech presidency of the Council of the EU.
In a statement, Jozef Síkela, Czech Minister of Industry and Trade, stresses that “the exceptional times” we are experiencing are forcing ministers to work “in an exceptionally fast, coordinated and supportive manner to maintain a united front against the continued use of the technology”. “Energy as a weapon by Russia”. “The agreement reached today will bring some relief to European citizens and companies”, continues the minister.
“The Member States flatten the electricity demand curve during peak hours, which will have a direct positive effect on prices”, says the official. As for windfall profit rates, Síkela explains that the 27-bloc countries will “redistribute” these amounts to “those who have difficulty paying their bills.”
The statement details the measures and explains that plans will be identified for a 10% voluntary reduction in consumption during peak hours between December 1 this year and March 31, 2023. “Member States will be free to choose the appropriate measures to reduce the consumption of the two objectives [os 5% obrigatórios e os 10% voluntários] during this time”.
The statement explains that, in relation to the approval of the cap of 180 euros/MWh for electricity producing companies, this limit “was created to preserve the profitability of operators and avoid penalties for investments in renewable energy.”
Regarding the “solidarity contribution” of the fossil sector, it is explained that it will be calculated from the profits subject to taxation, “as determined in the scope of national tax regulations in the fiscal year beginning in 2022 and/or in 2023 , which are on top of a 20% increase in the average annual tax rate since 2018.” And here the possibility of maintaining national measures equivalent to the solidarity contribution is left to the discretion of the Member States —“provided that they are compatible with the regulatory objectives and generate at least similar results”.
The measures are “temporary and of an extraordinary nature,” recalls the statement. Although the consumption reduction plans begin on December 1 and last until March 31, 2023, the result caps will remain until June 30, 2023.
There are only two exceptions to some of the measures presented: Cyprus and Malta.
Portugal is represented at this meeting by the Minister for the Environment and Climate Action, Duarte Cordeiro.
Brussels wants to impose cuts in electricity consumption in the 3 or 4 hours of the day with the highest demand
Source: Observadora
