Belgium, (Brussels Morning Newspaper) European Commission President Ursula von der Leyen announced aid measures aimed at cushioning the blow of the energy crisis.
Addressing the EU Parliament in Strasburg on Wednesday, she noted that the EC will propose revenue caps for fossil fuel companies and low-cost electricity generators, according to Reuters reporting.
Von der Leyen pointed out that these companies are profiting from rising energy prices and stressed that new rules will force them to share the profits.
“In these times it is wrong to receive extraordinary record revenues and profits benefiting from war and on the back of our consumers… in these times, profits must be shared and channelled to those who need it most,” she stated.
According to the Commission’s draft proposal, EU governments would take excess profit from low-cost power plants and redirect the money towards citizens and companies.
Caps and taxes
The draft shows that nuclear power plants as well as solar and wind farms would have to sell electricity at up to 180 euro per MWh. The move is aimed at limiting their profit as well as growth of electricity prices.
In addition, the draft proposes a windfall levy for fossil fuel companies aimed at limiting their profit from the rise of fossil fuel prices. According to the proposal, fossil fuel companies would have to pay one third of this year’s taxable surplus profits.
Von der Leyen added that the EC will propose new rules for bloc members to reduce consumption of electricity with the aim of saving fuel.
While the Commission scrapped its plan to impose a cap on Russian gas prices, EU member states are split on whether price caps would harm or help the bloc’s efforts to prepare for the heating season.
Gas storages in the EU are roughly 84% full on average, but analysts warn that the bloc will likely need to reduce fuel use in the heating season to avoid shortages.
The EC is also preparing plans to change collateral requirements for energy market participants to help alleviate solvency problems.
After the EC presents its proposal, EU member states will negotiate the details and approve final laws.