The Czech Presidency of the Council of the European Union suggested to Member States to review the definition of “surplus profits” generated by companies active in the crude oil, gas, coal and refinery sectors, on Friday 23 September, in a new draft compromise on the proposal for an EU regulation on emergency response to soaring energy prices.
According to the Czech document obtained by EUROPE, the temporary “solidarity contribution” of the fossil fuel sector would thus target the taxable profits of these companies, which are higher than a 20% increase in the average taxable profits of the four fiscal years starting on or after 1 January 2018.
The Commission, on the other hand, planned to apply this contribution on the basis of taxable profits exceeding by more than 20% the average profits of the previous three tax years (see EUROPE 13021/1, 13022/12).
New flexibilities for Member States
The draft compromise also includes new provisions to give Member States more flexibility.
In particular, they concern the capping of revenues for inframarginal electricity producers, i.e. those whose marginal cost is lower than the wholesale market price (mainly renewables, nuclear and lignite).
While the proposed regulation provides for an EU-wide cap of €180/MWh, Prague wants to leave Member States free to set a higher cap, provided that the investment and operating costs of the generators targeted by this measure exceed €180/MWh.
They would also have the possibility to exclude from the application of the cap companies that produce electricity by means of installations with a capacity of 1 MW or less (compared to 20 kW in the Commission proposal) in order to avoid excessive administrative burdens.
The draft compromise would also: - maintain or introduce national measures that further limit the revenues of inframarginal generators; - maintain national measures to limit the revenues of electricity producers not included in the list of inframarginal generators established in the regulation; - set a specific cap on the revenues from the sale of electricity produced from hard coal.
However, such national measures should respect a series of conditions such as not jeopardising investment signals, ensuring coverage of investment and operating costs or distorting the functioning of wholesale electricity markets.
Regarding the binding target to reduce gross electricity consumption during peak hours, Prague suggests that Member States may decide to target a different percentage of peak hours from the Commission’s proposal, i.e. hours corresponding to a minimum of 10% of the total hours of the month, “as long as at least 7% of peak hours are covered, and as long as the energy saved during peak hours is at least equal to the one that would have been saved with the parameters (proposed by the Commission)”.
Derogations
The Czech document also introduces new derogations whereby outermost regions that cannot be interconnected to the EU electricity market would not be covered by the target of reducing electricity consumption during peak hours and by the cap on inframarginal revenues.
Cyprus and Malta would not be required to comply with these measures.
Another amendment proposed by the Czech Presidency concerns the possibility for Member States to temporarily extend public intervention in price fixing in the form of regulated prices to SMEs.
While the Commission intended to limit this possibility to 80% of the beneficiary’s highest annual consumption over the last 5 years, Prague suggests removing this limit and replacing it by simply “taking into account” the beneficiary’s annual consumption over the last 5 years.
The draft compromise will be discussed by the Member States’ ambassadors to the EU (Coreper) on Wednesday 28 September, with a view to reaching a political agreement on Friday (30 September) at an extraordinary meeting of the EU27 energy ministers.
See the draft compromise: https://aeur.eu/f/39e (Original version in French by Damien Genicot)