The EU agrees to save electricity and more taxation for energy companies

The European energy ministers have given this morning, after barely an hour of debate, the green light to the European plan to save electricity, the cap on income from renewable energy, nuclear and coal, and the proposed tax on oil companies by the European Commission just two weeks ago to deal with the rise in the price of electricity, a first wave of emergency measures that should be followed by initiatives to act on the price of gas.

NewsEditor
NewsEditor
30 September 2022 Friday 06:36
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The EU agrees to save electricity and more taxation for energy companies

The European energy ministers have given this morning, after barely an hour of debate, the green light to the European plan to save electricity, the cap on income from renewable energy, nuclear and coal, and the proposed tax on oil companies by the European Commission just two weeks ago to deal with the rise in the price of electricity, a first wave of emergency measures that should be followed by initiatives to act on the price of gas.

"We live in exceptional times and we are working exceptionally quickly, in coordination and in solidarity to establish a common front against Russia's continued use of energy as a weapon of war," said Jozef Síkela, Minister of Industry of the Czech Republic, the country that holds the rotating presidency of the Council when announcing the pact. "The deal will give relief to citizens and companies. Member states will redistribute excess profits from the energy sector to those who are struggling to make ends meet."

The latest draft of the agreement proposed by the presidency, which greatly relaxed the original proposals of the European Commission so that they would be coupled with the measures already adopted or currently being debated in the member states, has been approved "without changes", explained community sources .

The first point of the new regulation agreement establishes a voluntary reduction of electricity consumption of 10% with respect to the usual demand in each country, with a mandatory reduction of 5% in peak hours, those in which the price, but gives flexibility to Member States to define what these brackets are and account for the demand reduction efforts already made. The electricity saving plan will run from December 1, 2022 to March 31, 2023. Spain originally defended that all percentages of reduction in electricity consumption were voluntary but has endorsed the final commitment. The measure will be in force until June 30, 2023.

The second point of the regulation establishes a cap on the profits of companies that generate electricity with inframarginal technologies (that is, the cheapest that are entering the market at the moment: renewables, nuclear and lignite) of 180 euros per megawatt hour. The Spanish Government already established a similar measure last year but with a much lower threshold, 67 euros, but like all countries that already have or are in the process of approving similar initiatives, it will be able to maintain its own design. The figure of 180 euros is actually a maximum that everyone is free to lower and is designed to "preserve the ability of operators to obtain profits and avoid discouraging investments in renewables," the Council explained in a statement.

Finally, the political agreement reached today by the ministers establishes a temporary "solidarity contribution" to tax 33% of the extraordinary profits of oil, gas and refinery sector companies, defined as those that exceed 20% of the average recorded in the last four years. The measure may be applied to both the benefits obtained in 2022 and 2023, depending on the tax legislation of each country.

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