Meeting in Brussels on Friday 30 September, the energy ministers of the European Union Member States reached an agreement on the proposed EU Council regulation introducing emergency measures to mitigate soaring energy prices.
“The agreement reached today will bring relief to European citizens and companies. Member States will flatten the curve of electricity demand during peak hours, which will have a direct positive effect on prices (and) will redistribute surplus profits from the energy sector to those who are struggling to pay their bills”, said Jozef Síkela, Czech minister of industry and trade, whose country currently holds the rotating Presidency of the EU Council.
The text approved by the ministers includes several significant changes compared to the European Commission’s initial proposal presented on 14 September (see EUROPE 13021/1, 13022/12).
Capping of inframarginal revenues
While the Commission wanted to apply an EU-wide cap of €180/MWh to the revenues of all inframarginal electricity generators (those with the lowest marginal costs) to allow governments to then redistribute them to end consumers, the agreement provides for Member States to be able to maintain or introduce measures that further limit these revenues, “including the possibility to differentiate between technologies”.
Member States could also take the decision as to whether the cap should only apply to 90% of inframarginal revenues that exceed €180/MWh.
They would also have the possibility to exempt: - producers generating electricity with facilities with an installed capacity up to 1 MW (compared to 20 kW in the Commission’s proposal); - electricity produced by hybrid installations that also use conventional energy sources; - inframarginal revenues generated in the balancing markets.
Targets for reducing electricity consumption
Member States have also given themselves more flexibility with regard to the binding target to reduce their gross electricity consumption by 5% during peak hours.
Instead of identifying each month’s peak hours corresponding to a minimum of 10% of the total hours in that month, they will identify peak hours corresponding in total to a minimum of 10% of all hours in the period between 1 December 2022 and 31 March 2023.
However, they may decide to target a different percentage of peak hours, i.e. hours corresponding to a minimum of 10% of the total hours in the month, “as long as at least 3% 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 [following the above approach]”.
The text also includes a new paragraph allowing Member States to take into account the increase in gross electricity consumption resulting from reaching gas demand reduction targets and electrification efforts in the calculation of the indicative 10% reduction target for their gross electricity consumption.
Temporary solidarity contribution
Concerning the introduction of a temporary compulsory solidarity contribution targeting companies active in the crude oil, fossil gas, coal and refining sectors, the text now leaves the possibility for Member States to calculate this contribution on the basis of the taxable profits of these companies in the fiscal year beginning in 2022 and/or 2023.
Profits that are higher than a 20% increase in average annual taxable profits since 2018 will be subject to a contribution rate of at least 33%, as proposed by the Commission.
Member States may retain national measures equivalent to this instrument, provided that they are compatible with the objectives of the regulation and generate at least comparable revenue.
Support for SMEs
With regard to the possibility of implementing regulated prices for the supply of electricity to SMEs, the text no longer contains the condition that such public interventions must be limited to 80% of the beneficiary’s highest annual consumption over the last 5 years.
Derogations
In addition, the EU Council introduced specific derogations for the outermost regions, small isolated and small connected electricity systems, as well as for Cyprus and Malta (see EUROPE 13030/1).
Next steps
Most of these temporary measures will apply until 31 December 2023, with the exception of the binding target for reducing gross electricity consumption during peak hours (from 1 December 2022 to 31 March 2023) and the inframarginal revenue cap (from 1 December 2022 to 30 June 2023).
The text will be formally adopted by written procedure next week. It will then be published in the Official Journal of the EU and will enter into force the following day.
See the text of the agreement: https://aeur.eu/f/3cb (Original version in French by Damien Genicot)