At first of this month, Russia stated it will not reopen its primary Nord Stream 1 pipeline to produce Europe – the most recent in a string of provide cuts, which Moscow blames on Western sanctions imposed over its invasion of Ukraine.
The European Fee is because of set out the EU proposals on Wednesday and governments can then thrash out the main points, probably approving them at a Sept. 30 assembly of power ministers.
Here’s what’s in a draft of the European Fee’s upcoming proposals, seen by Reuters.
WINDFALL LEVY ON NON-GAS POWER PLANTS
The draft EU proposal would claw again income from electrical energy mills that don’t run on fuel and require governments to spend the money on cushioning customers and business from hovering power payments.
Within the EU system, fuel vegetation usually set the worth of electrical energy. Non-gas fuelled energy vegetation promote their electrical energy on the ensuing excessive costs – despite the fact that they don’t have to pay big payments for fuel.
Brussels desires to skim off any extra income that wind, photo voltaic, nuclear and biomass vegetation make below this method, in accordance with the draft, which might change earlier than it’s printed.
The measure would apply a worth restrict per megawatt hour on the income these mills get for his or her energy out there. The income cap can be utilized after energy transactions are settled, so it will circuitously have an effect on costs in Europe’s exchange-traded electrical energy market, the draft stated. It could exclude revenues created from authorities subsidy schemes.
Coal vegetation wouldn’t be coated as a result of their gasoline prices have additionally elevated sharply this 12 months, the draft stated.
A draft of the proposal, seen by Reuters on Tuesday, included a 180 euro/MWh income restrict – decrease than the 200eur/MWh included in a earlier draft.
That will cap mills’ revenues at lower than half of present market costs. Germany’s front-year electrical energy worth hit a document excessive of greater than 1000 euros/MWh final month and is at present buying and selling at round 460 euros/MWh.
Business teams say most of Europe’s wind farms are usually not reaping windfall income from excessive power costs as a result of they promote their energy below fixed-price contracts, a lot of them authorities help schemes – elevating questions on how a lot cash the EU measure would increase.
PROFIT SHARING FOR FOSSIL FUEL FIRMS
Corporations which have made bumper income from promoting fossil fuels at document costs can be required to make a monetary contribution to assist residents and industries grappling with sky-high payments, below the EU’s draft plans.
EU international locations would introduce a brief windfall revenue levy for oil, fuel, coal and refining corporations established within the EU. It could apply to 33% of those companies’ “taxable surplus income made within the fiscal 12 months 2022”, in accordance with the draft.
International locations together with Italy have already launched a windfall revenue tax on power companies. The draft stated Brussels would put in place a minimal fee for all EU international locations, however governments might select to go increased.
ELECTRICITY DEMAND CUT
The draft EU proposal would impose a compulsory goal for international locations to chop electrical energy consumption this winter, to make sure Europe has sufficient gasoline to final the colder months.
EU fuel storage is now 84% full, exceeding the EU’s pre-winter filling goal. However analysts say Europe will nonetheless have to slash fuel use over winter, to keep away from storage amenities operating dry. EU international locations have already agreed to curb their fuel demand this winter – and electrical energy use may very well be subsequent.
EU international locations can be required to curb their energy use by 5% in the course of the 10% of hours with the best electrical energy demand every month, the draft stated – a transfer it stated might curb fuel use within the energy sector by round 4% over a four-month interval.
EMERGENCY LIQUIDITY FOR POWER FIRMS
EU international locations have additionally tasked Brussels with designing “emergency liquidity devices” to assist power corporations dealing with hovering collateral wants.
Utilities promote some energy prematurely to safe a sure worth however should submit a money deposit with exchanges in case they default earlier than the facility is produced. Hovering energy costs have meant companies should submit larger margin deposits, leaving some struggling to search out the additional money.
EU officers stated plans for emergency liquidity help had been nonetheless being drafted, and would doubtless be printed later than Wednesday. A be aware printed by the Fee final week talked about some choices that EU policymakers are exploring.
“This would possibly contain accepting a wider vary of property as collateral for margining objective, facilitating collateral transformation, financial institution ensures and, as a liquidity supplier, contain state assure schemes to help such liquidity mechanisms,” the Fee be aware stated.
NO GAS PRICE CAP
The draft EU proposal didn’t embody a fuel worth cap – an concept that has divided the bloc’s member states.
EU international locations have requested Brussels to suggest a cap however disagree on whether or not this could apply to all imported fuel, pipeline flows or wholesale fuel buying and selling.
Germany, the Netherlands and Denmark oppose a common fuel worth cap, warning that it might depart international locations struggling to draw provides in price-competitive world markets, and endanger Europe’s winter power safety.
Italy and Poland are among the many supporters that say capping fuel costs would pull down payments for residents and industries.
The EU has additionally backed away from an earlier plan to impose a worth cap on Russian fuel. International locations together with Hungary and Austria had opposed that concept in case Moscow retaliated by reducing off the dwindling provides it nonetheless sends to the EU.
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