BRUSSELS, Sept 7 (Reuters) – The European Commission will propose a price cap on Russian gas, alongside measures including a mandatory EU cut in electricity use and a cap on the revenue of non-gas power generators, the bloc’s chief said on Wednesday.
“We will propose a price cap on Russian gas… We must cut Russia’s revenues which Putin uses to finance this atrocious war in Ukraine,” European Commission President Ursula von der Leyen told reporters.
President Vladimir Putin said on Wednesday that Russia will stop supplying gas and oil if price caps are imposed.
Some EU countries – which would need to approve the EU proposals – are wary of capping Russian gas prices in case that costs them the dwindling supply they still receive from Moscow.
Von der Leyen outlined the EU’s upcoming emergency proposals to lower soaring gas and power prices, which have hiked bills for households and hammered Europe’s energy-intensive industries.
The EU wants to cap the revenue of non-gas fuelled generators and rechannel their “unexpected profits” into measures that support households and companies, von der Leyen said.
European power prices are typically set by gas plants, and the cap would aim to reduce the cost of electricity generated by wind farms, nuclear plants and coal generators that have lower running costs as they are not exposed to surging gas prices.
Oil and gas firms that have posted huge jumps in profits would also be required to make a “solidarity contribution”, von der Leyen said, without giving further detail.
Other measures Brussels will put forward include a requirement for countries to cut electricity use during peak hours, and liquidity help for firms facing huge collateral requirements.
EU countries’ energy ministers will discuss the proposals at an emergency meeting on Friday.
Power and fuel prices have soared in Europe as Russia has curbed the amount of gas it sends to Europe. Moscow has blamed the supply cuts on technical issues and Western sanctions imposed over its invasion of Ukraine.
EU plans non-gas power price cap of 200eur/MWh – document
The European Commission has drawn up plans for an EU cap of 200 euros per megawatt hour on the price of electricity from generators that do not run on gas, according to a draft document seen by Reuters.
Brussels is drafting emergency measures to pull down rocketing gas and electricity costs this winter. A draft of the Commission proposals, seen by Reuters, also includes a target for countries to cut their electricity use by 10% each month compared with the same period in the last five years.
Earlier, the Czech Republic wants to remove capping Russian gas prices from the agenda of an extraordinary European energy ministers’ meeting on Friday, Industry Minister Jozef Sikela said on Wednesday, calling it a political tool and not a solution.
EU energy ministers are set to discuss on Friday ways to tame energy prices which have surged as Russia has halted most gas flows to Europe in response to European sanctions over Russia’s invasion of Ukraine.
The Czechs are helping to guide discussions as holders of the EU’s rotating presidency.
Sikela told a Czech Senate committee on Wednesday the country would try to remove this option from the agenda of the energy ministers’ meeting, according to CTK news agency.
“It is not a constructive proposal, according to me. It is more another way to sanction Russia than an actual solution to the energy crisis in Europe,” CTK quoted Sikela as saying.
“And we don’t want to prepare more sanctions now, but rather solve the situation with energy.”
The ministers will consider options including a price cap on imported gas, a price cap on gas used to produce electricity, or temporarily removing gas power plants from the current EU system of setting electricity prices.
Proposals will also include capping price of electricity made in non-gas power plants, and providing liquidity to power traders to cover margins they have to deposit amid market volatility.
The European Commission said on Monday a price cap on Russian pipeline gas would be part of its proposals. France is in favour of putting a cap on Russian gas, President Emmanuel Macron said on Monday.
Russian President Vladimir Putin on Wednesday blasted Europe’s idea for a price cap on Russian gas as “stupid,” and said it would lead to price rises and that global demand for Russian energy was high.
(Reporting by Jason Hovet and Jan Lopatka; editing by Jason Neely and Angus MacSwan)
