On Monday 19 September, the Czech Presidency of the Council of the European Union transmitted to the Member States a first draft compromise on the emergency measures proposed by the European Commission to deal with the surge in energy prices.
More flexibility on the cap on inframarginal income
Concerning the limitation of revenues for electricity generators with a cost below the wholesale market price (‘inframarginal generators’), the Czech document retains the cap foreseen by the Commission (see EUROPE 13021/1, 13022/12), i.e. €180 EUR/MWh.
However, it proposes to allow Member States to set a higher cap for electricity producers that can demonstrate that their current level of costs exceed €180 EUR/MWh.
This specific cap should allow “for those costs and a reasonable profit margin to be covered” and shall be designed “so as not to affect the merit order and the price formation on the wholesale market” the draft compromise says.
Prague also introduces a derogation whereby Member States could decide not to apply the cap to electricity produced in hybrid plants that also use conventional energy sources, if the application of the cap would lead to a risk of increased CO2 emissions and decreased renewable energy production.
The document also adds peat to the list of electricity sources covered by the cap.
Revision of the calculation of peak hours
The draft compromise also includes changes to the proposal to reduce Member States’ gross electricity consumption by 5% during peak hours.
While the target remains binding, Prague suggests that these peak hours should not be calculated on a monthly basis, contrary to the Commission’s proposal.
According to the Czech document, these hours should correspond to a minimum of 10% of all hours in the period between the 1 December 2022 and 31 March 2023.
They are defined as “the hours of the day where day-ahead wholesale electricity prices are expected to be the highest, the gross electricity consumption is expected to be the highest or the gross consumption of electricity generated from sources other than renewable sources (...) is expected to be the highest”.
Temporary solidarity contribution
With regard to the temporary solidarity contribution applied to excess profits generated by companies in the oil, gas, coal and refining sector, the draft compromise maintains the 33% rate foreseen by the Commission.
However, it adds that Member States should be able to replace this instrument with “equivalent national measures”, whereas the Commission had simply provided for the possibility of combining it with national measures.
These national measures must share similar objectives and be subject to rules equivalent to those of the temporary solidarity contribution, while generating revenue at least equal to the estimated proceeds of the solidarity contribution, the Czech document states.
Redistributing congestion revenues
The draft compromise also introduces a new article underlining that excess congestion income - the revenue that accrues to an electricity transmission system operator when interconnection capacity between two electricity systems is less than the demand for transactions - can also be used to finance measures to support final electricity consumers.
The Czech Presidency also proposes to delete Article 8 on incentives for renewable electricity purchase agreements, on the grounds that this provision would not be in line with the legal basis for adopting these various emergency measures, namely Article 122 of the Treaty on the Functioning of the European Union (TFEU).
The draft compromise will be discussed by the Member States’ ambassadors to the EU (Coreper) on Wednesday 21 September, with a view to reaching a political agreement on 30 September at the extraordinary meeting of EU energy ministers.
See the draft compromise: https://aeur.eu/f/361 (Original version in French by Damien Genicot)