The Council of the EU agrees on emergency measures to lower energy prices

The EU Ministers of Energy have agreed on emergency measures to reduce energy prices first introduced in early September 2022. The measures, which remain the same as those proposed by the European Commission in September 2022, will apply from 1 December 2022.

First, the Council of the EU agreed to an overall reduction target of 10% of gross electricity consumption and a mandatory reduction target of 5% of the electricity consumption in peak hours. Member states will identify 10 % of their peak hours between 1 December 2022 and 31 March 2023 during which they will reduce the demand. Member states will be free to choose the appropriate measures to reduce consumption for both targets in this period (Until 31 March 2023).

The Council also agreed to cap the market revenues at €180/MWh for electricity generators, including intermediaries, that use inframarginal technologies to produce electricity, such as renewables, nuclear and lignite (Until 30 June 2023).

Member States will also have to set a mandatory temporary solidarity contribution on the profits of businesses active in the oil, natural gas, coal, and refinery sectors. The solidarity contribution would be calculated on taxable profits, starting in 2022 and/or in 2023, which are above a 20% increase of the average yearly taxable profits since 2018. In addition, member states can temporarily set a price for the supply of electricity to small and medium-sized enterprises to further support SMEs struggling with high energy prices.

The council of the EU has not stated on the introduction of a price cap on all wholesale gas transactions to contain inflation. Fifteen countries, including France, Italy and Poland were in favor while the remainder, including Germany, Austria and the Netherlands opposed the introduction of a price cap.