ECONOMY
EU emergency energy plan montage
September 8, 2022 - The European Union is proposing capping power prices and reducing electricity use in an emergency plan to help the region’s businesses and households with soaring energy bills.
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The head of the European Commission, Ursula von der Leyen, outlined a five-point plan in response to an energy price crisis driven by the Russian shutdown of the critical Nord Stream 1 pipeline.
The cost of gas determines the price of electricity rather than cheaper renewables and nuclear power. As a result of all-time-high gas prices, low-carbon electricity producers have generated record profits.
The unprecedented plan will limit these excessive revenues of companies by imposing a price cap of €200 per megawatt hour on electricity generated from technologies such as renewables, lignite or nuclear energy.
Proposals also include a levy on fossil-fuel producers, a price cap on Russian gas imports, measures to increase liquidity for energy companies if needed and a reduction of electricity use.
The EU recommends two reduction targets. The first would require governments to put in place measures that would cut overall electricity consumption from all consumers by 10% to 15%. The second would target the most expensive production hours and call for a mandatory cut of at least 5% in net consumption during peak hours.
EU countries’ energy ministers will discuss the proposals at an emergency meeting on Friday (September 9, 2022).