Brussels opens the door to study “all options” to curb the price of electricity

The European Commission still does not propose delinking the price of gas from that of electricity, as they have been demanding for months Spain or Francebut given the current “emergency” situation, aggravated by the Russian invasion of Ukraineis willing to study “all possible options” to adopt “emergency measures & rdquor; with which to limit the high price of gas from continuing to infect that of electricity. The sharp rise in prices recorded in recent days, as a result of the brutal attack on Ukraine, has convinced the Community Executive that the measures adopted in October are not insufficient and that it is necessary to move in the direction proposed by the Government of Pedro Sanchez.

The European Commission still does not propose decoupling the price of gas but is willing to open a debate and allow temporary limits to be established on the price of electricity

“We will urgently consult all the affected actors and we will present options in the coming weeks & rdquor ;, the Community Executive has announced within the framework of the new energy communication adopted this Tuesday with the focus on reducing dependence on Russian gas, which supplies the EU with 40% of the gas it consumes. Although the Commission does not specify proposals, it does mention the possibility of introducing Temporary limits on electricity prices. “The communication confirms that Member States can regulate electricity prices. It is an option that already exists, it is allowed by the European legislative framework, and we have published detailed guidelines & rdquor ;, explained the energy commissioner, Kadri Simson.

In addition to this route, the European Commission undertakes to evaluate the options “to optimize the design of the electricity market in order to take advantage of the benefits of low-cost energy & rdquor ;, such as renewables. For this, it will take into account the final report of the European Agency for the Cooperation of Energy Regulators (ACER) and other contributions on the operation of the electricity market on “the benefits and drawbacks of alternative mechanisms for setting electricity prices.” Brussels also commits to follow up to keep electricity at an affordable price without interrupting supply and to continue investing in the ecological transition.

The new strategy advocates increasing the level of reserves in gas deposits to 90% by October 1 and a greater diversification of suppliers to curb dependence on Russia

The plan also includes the possibility for Member States to temporarily introduce a tax on electricity for the additional benefits obtained with the rise in gas prices with the aim of redistributing them and lightening the consumer’s bill. “Member states may consider temporary tax measures on windfall profits. According to the International Energy Agency, these fiscal measures could generate 200,000 million euros in 2022 to partially offset the increase in energy bills & rdquor ;, explains the European Commission, which maintains that the redistribution of income would partly prevent the current high prices of gas increase the costs borne by end customers”.

The only buts that Brussels puts is that these types of measures cannot be applied retroactively, they have to be limited to a specific crisis situation, designed “carefully & rdquor; to avoid “unnecessary market distortions”, while encouraging investments in renewable energy, do not affect the electricity market in the long term or the structural part of a global price increase.

Less gas from Russia

The main objective of the strategy is to continue making the EU independent of Russian gas. Brussels’ goal is to achieve full independence by the end of the decade and reduce imports from Russia by 80% by the end of the year. The EU currently imports 155 bcm of natural gas from Russia. The proposal advocates reducing it this year to 55 bcm, replacing it with the import of more liquefied natural gas (LNG), more gas from gas pipelines from other third countries, increasing generation through solar energy, wind energy as well as efficiency energetic.

The plan also emphasizes the need to increase the gas stored in the EU from October 1 to 90% to face the next winter with guarantees and since not all countries have storage capacity, they announce the creation of a mechanism to guarantee a fair distribution as well as the possibility of making joint purchasing operations. “Gas storage is not going to be a panacea and we need to find alternative suppliers to get the gas we need, but the fact is that gas storages have to be able to participate in the solution,” Simson explained.

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Brussels also confirms that it is still investigating Gazprom, the Russian gas monopoly, due to concerns about possible distortions of competition. “This company displays unusual business behavior. The average filling level of the warehouses operated by Gazprom in the EU it stands at around 16%, while storage facilities not operated by Gazprom reach 44%. The Commission is currently investigating on a priority basis all allegations of possible anti-competitive business conduct by Gazprom”, confirms the Commission.

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