The legislative proposal with which the European Comission will respond this week to the mandate of the Twenty-seven to intervene in the european electricity market It will include three of the measures that generated the most support on Friday among EU energy ministers: limits on the extraordinary profits that inframarginal technologies such as renewables or nuclear are obtaining, a “solidarity contribution & rdquor; from fossil fuel companies based on supplementary profits earned in fiscal year 2022 and a reduction in electricity consumption that will include a mandatory savings target for the most expensive consumption hours of the day.
The President of the European Commission, Ursula Von de Leyenwill detail the new package this Wednesday during the State of the Union debate, once adopted by the College of Commissioners. His initial plan also included a cap on price of gas imported from Russia by pipe, an idea that generates misgivings in some capitals and that, according to the latest draft, seems to have been parked. The consulted draft does not include the creation of a liquidity instrument to guarantee that energy operators have sufficient collateral guarantees, another of the ideas that received majority support from the energy ministers last Friday, although the Community Executive will continue to work on this mechanism in parallel.
Contribution of the oil companies
Brussels starts from the premise that not only companies that generate electricity must contribute, but also companies in the fossil fuels because they are also getting richer than expected thanks to the market situation and extremely high prices. For this reason, he proposes to introduce a “solidarity contribution & rdquor ;, of an “exceptional and temporary” nature, which makes the fossil fuel sector also lend a hand. According to the draft, oil, gas, coal companies and refineries they will have to make a contribution based on the supplementary benefits of the fiscal year of 2022. This income will later be used by governments to “finance measures to help mitigate the current crisis & rdquor; between households and businesses.
“The collective establishment, by the Member States, of a coordinated, unique and temporary solidarity contributionbased on the excess of taxable profits obtained in the fiscal year 2022 in energy companies in the Union’s oil, gas, coal and refinery sectors governed by a common framework, it is necessary to help protect consumers and businesses against rising energy prices throughout the Union, while preserving the proper functioning of the internal market and guaranteeing the necessary solidarity between the Member States & rdquor ;, defends the Commission. The measure, continues the document consulted by EL PERIÓDICO, which is not yet final, would be applied to the surplus profits of companies in 2022, at a level above the average of taxable profits in the three fiscal years beginning in 2019 (2019, 2020 and 2021), calculated according to the fiscal rules of each country. If the average annual result for the period covering the three fiscal years is negative, the contribution will be zero.
In Spainthe Government has promoted a legislative initiative, which begins to be processed this Tuesday in the Congress of Deputies, by which a temporary tax is established on all the main energy companies (not only oil companies), with a rate of 1.2 % on the turnover of 2022. The difference between this temporary tax -which will have the legal nature of a non-tax public patrimonial benefit- and the “solidarity contribution” proposed by Brussels is that the latter will not tax total sales, but the taxable profit that exceeds the average of the last three years.
Reduce the consumption
The draft of the regulation proposal finalized by Brussels confirms the idea of establishing two objectives for reducing the demand for electricity. The first will require member states to adopt “sufficiently ambitious” measures; to reduce the overall consumption of all consumers. The second will be a mandatory target to boost savings during the peak hours of the day when more is usually consumed. Member States will have to choose 3-4 hours per day, normally the hours of greatest consumption, although it could also include the hours in which electricity generation from renewables is low and generation from marginal plants is necessary to cover the demand.
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As demanded on Friday by the vice president Theresa Rivera and the rest of our European colleagues, the proposal offers discretion to the Member States to define the time bands and the measures, although it suggests economically efficient and market-based measures, such as auctions or bidding systems for demand or unconsumed electricity. Although in initial drafts the European Commission had suggested a saving of 10% in general and a mandatory 5% in peak hours, the latest document does not mention numbers. It does maintain that reducing electricity consumption could also lead to cutting gas consumption by 1.2 bcm over a four-month period, which means 3.8% gas consumption in the same period.
Cap on the benefits of renewables
The draft also confirms Brussels’ intention to impose a cap on windfall profits for companies that produce electricity with energy sources other than gas – such as renewables or nuclear – which are cheaper but benefit from high gas prices, which is Who sets the final price? According to Brussels, the income limit should be set at a level that covers most of the EU’s inframarginal generators and does not put at risk either the profitability of existing plants or future investments. This type of cap will allow, according to the draft, which does not include figures, to generate income for Member States to finance measures to support final electricity customers, preserve price signals in markets throughout Europe and cross-border trade.