EU energy ministers on Friday tasked the European Commission to press ahead with a cap on the revenues of non-gas power producers benefiting from soaring energy prices, while backing away from capping Russian gas prices.
Seeking ways to help with rising consumer bills, the ministers asked the European Commission to prepare other emergency measures including a broader gas price cap not specifically targeting Russia, according to a meeting summary published by the Czech Republic, which holds the rotating EU presidency.
President Vladimir Putin said this week that Moscow would cut all supply to Europe if a price cap was applied on Russian gas.
The EU’s windfall plan, yet to be fleshed out, would see governments skim off excess revenues from non-gas energy producers that can currently sell their power at soaring prices determined by the price of gas, and use the money to curb consumer bills.
Fossil fuel companies would also have to pay a “solidarity contribution,” the meeting summary said.
“The measures the Commission has recommended, in taking some of those excess profits and recycling them back into the households, makes sense,” Irish Environment Minister Eamon Ryan said on Friday.
The Commission is expected to publish details of the proposals next week. Energy ministers may hold another emergency meeting later this month to negotiate and approve the final plans, two EU diplomats told Reuters.
“Everybody is in a hurry to find a solution,” Sweden’s Energy Minister Khashayar Farmanbar said.
A proposal to cap Russian gas prices did not win broad support among EU countries, the meeting summary showed.
EU diplomats said governments had broadly supported an EU proposal to offer emergency liquidity to power firms facing soaring collateral requirements, and tasked Brussels with designing such measures.
NO RUSSIAN GAS PRICE CAP FOR NOW
Brussels had suggested that the EU cap the price it pays for Russian gas – an idea supported by Baltic states who said it would deprive Moscow of cash to fund military action in Ukraine.
But central and eastern European states still receiving some Russian fuel fear that would cause a total cut-off. Countries including Belgium had questioned whether a cap would have much impact on reducing prices when deliveries from Moscow are so low.
“If price restrictions were to be imposed exclusively on Russian gas, that would evidently lead to an immediate cut-off in Russian gas supplies.” Hungarian Foreign Minister Peter Szijjarto said.
Italy’s Ecological Transition Minister Roberto Cingolani said 15 EU states spoke in favour of a generalised price cap on all imports of gas.
The European Commission, which did not include a general gas price cap in a list of measures it suggested to countries ahead of the meeting, warned that capping liquefied natural gas prices in Europe could risk supplies going to other markets, depriving Europe of much-needed fuel.
“We have to take care that we will not jeopardise our security of supply situation,” Simson said.
Energy bills, already surging as demand for gas recovered from the COVID-19 pandemic, have rocketed higher since the Ukraine war.
Russian gas pipeline deliveries via the three main routes to Europe have fallen by almost 90% in the last 12 months, Refinitiv data show. Moscow has blamed supply cuts on technical issues caused by Western sanctions over its invasion of Ukraine.
As far as the windfall profit plan is concerned, a draft of the upcoming Commission proposal, seen by Reuters, would cap at 200 euros ($202) per megawatt hour the revenues of wind, nuclear and coal generators.
European power prices are typically set by gas plants, so the cap would aim to skim off excess profits made in recent months by these producers that have lower running costs but have still been able to sell their power at soaring prices.
The idea of EU-wide “emergency liquidity instruments” to help companies facing soaring collateral requirements also won support from ministers.
Finland and Sweden have already offered billions of dollars in liquidity guarantees to power companies in a bid to prevent the cash squeeze from toppling firms.