Energy price: the plan that Brussels will submit to the Twenty-Seven

La présidente de la Commission, Ursula von der Leyen, prévoit de proposer un paquet de mesures sur l'énergie dès le 13 septembre.

Posted Sep 6, 2022, 6:24 PMUpdated on Sep 6, 2022 at 6:49 PM

The President of the European Commission, Ursula von der Leyen, will receive this Wednesday lunchtime the ambassadors of the Twenty-Seven to the European Union to discuss her speech on the State of the EU, which she will give on Wednesday September 14 at the European Parliament in Strasbourg. The energy subject will dominate the exchanges, while the prices of gas and electricity pose a political and social problem to all member states.

According to our information, the Commission will later circulate a “non paper” which will bring together the main lines of its current thinking on the urgent interventions to be carried out to preserve the internal market and relieve both households and industrialists. All this without going against the efforts to decarbonise the economy carried out within the framework of the European “Green Deal”.

Smooth peaks in demand

The Brussels executive first wants to work on electricity demand and make what it calls “intelligent savings”, in a context of shortages aggravated by a drought which has considerably reduced hydroelectric production and complicated the operation of thermal and nuclear power stations. The objective is to smooth out consumption peaks, because it is these, by forcing the commissioning of expensive gas-fired power stations, which push electricity prices upwards. Just as the Twenty-Seven have agreed on a target for reducing consumption gas in July the Commission wants to set a target for reducing electricity consumption.

Like the Franco-German duo , Brussels then wants to set up a financial contribution from so-called “inframarginal” producers, whose production costs are lower than those of gas and coal-fired power stations (roughly renewables and nuclear). Beyond a price threshold to be determined, energy producers would have to return the difference compared to the market price, in order to recover a rent considered unjustified.

To this would be added an exceptional levy on producers centered on fossil fuels. These new revenues would remain at the level of the Member States, which could then redistribute them to the most vulnerable households and the most weakened businesses.

Public guarantees

Fourth pillar: the Commission wants to ensure liquidity on the futures markets and thus allow energy companies to continue to operate. The States would be authorized, subject to an adaptation of the State aid framework, to grant public guarantees capable of reassuring the banks.

These measures would be based on Article 122 of the Treaty on the Functioning of the EU, according to which “the Council, on a proposal from the Commission, may decide, in a spirit of solidarity between the Member States, on measures appropriate to the situation economic, in particular if serious difficulties arise in the supply of certain products, particularly in the field of energy”.

Cap the price of Russian gas

At the same time, the Commission also wants to propose, perhaps on the same legal basis, a ceiling on the Russian gas prices transported by pipeline (if deliveries resume). For this whole series of measures, the Commission wishes to use procedures for validation by qualified majority of the Member States, and avoid at all costs unanimous decision-making methods. In the past, several Member States have demonstrated that they can use their power of veto to obtain strong concessions from their partners.

Depending on how these ideas are received on Friday by the Ministers for Energy of the Twenty-Seven meeting in Brussels, the European executive, after debate in the College of Commissioners, plans to adopt a formal proposal as soon as September 13. The Twenty-Seven should approve it quickly.

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