🚨 The European Council agrees on emergency measures to reduce energy prices

European ministers met on Friday 30 September 2022 to agree on emergency measures to reduce energy prices. We summarize the list of measures for you.

Measures for SMEs

The Council agreed that Member States could temporarily set a price for the supply of electricity to small and medium-sized businesses in order to further support SMEs facing the energy crisis. Member States also agreed that they could Exceptionally and temporarily set an electricity supply price that is lower than the cost.

A reduction in electricity demand

The European Council agreed on an overall reduction target willing of 10% of gross electricity consumption and a reduction target obligatory of 5% From electricity consumption to Peak hours.

“We are in an energy war with Russia, winter is coming and we need to act now, that is, today, maybe tomorrow, not in a week and certainly not in a month,” says the Czech minister.

A ceiling on market revenue for inframarginal products at €180/ MWh

The Council agreed to cap market revenue at 180 euros/MWh for electricity producers, including intermediaries, who use so-called inframarginal technologies to produce electricity, such as renewable energies, nuclear power and lignite.
These operators have made very significant financial gains in recent months, without increasing their operational costs. This is due to the role of coal and gas as marginal sources of price fixing, currently inflating the final price of electricity.

This ceiling is therefore fixed at €180/MWh and the difference between this level and the wholesale market price must be recovered by the states to be r distributed to households and businesses.

A solidarity contribution for the fossil fuel sector

The Member States agreed to establish a temporary solidarity tax mandatory on the profits of companies active in the crude oil, natural gas, coal and refinery sectors.

The solidarity contribution would be calculated on taxable profits, as determined under national tax rules in the financial year beginning in 2022 and/or 2023, which are greater than an increase of 20% in average annual taxable profits since 2018. The solidarity contribution will apply in addition to the regular taxes and levies applicable in the Member States.

European states will use the product of the solidarity contribution to provide a financial support for households and businesses and to mitigate the effects of high retail electricity prices.

Date of application of emergency measures

It should be understood that these measures, mentioned above, are temporary and extraordinary. They will apply from December 1, 2022 to December 31, 2023. The goals to reduce energy consumption will apply until 31 March 2023. The mandatory market revenue cap will apply until June 30, 2023.