Dear energy, the Commission’s (overdue) proposals: energy companies will finance aid for families and businesses – Il Fatto Quotidiano

There is no roof at the gas pricewhich like has admitted both the EU Commissioner Thierry Breton it would be at this point useless given the sharp decline in supplies from Moscownor the expected measures to guarantee liquid assets ai gas importers who risk going upside down. Tuesday the European Commission has finally approved its long-awaited package of proposals for an “emergency intervention to tackle high energy prices”. There are three key points. A compulsory reduction of at least 5% consumption of electricity during peak hours, when i prices are higher and demand is mainly covered by the a gas. A ceiling of 180 euros / megawatt hour to the revenues of electricity producers from renewables and from nuclear: the difference compared to the market price – which in Italy these days is well above 450 euros – should be confiscated to be then used by the States for mitigate the impact of price increases on households and businesses. Finally, with the same purpose, a solidarity contribution of at least 33% on extra profits of companies active in the sectors of Petroleumof the gasof the coal and of refining. According to EU estimates, a total of 140 billion could be obtained from the two interventions. The markets have acknowledged that the price ceiling is not there and on Ttf in Amsterdam, gas rose by 9.7% to 217.88 euros per megawatt hour.

The proposal of Council regulation was approved by the commissioners (based on theArticle 122 of the Treaty on the Functioning of the EUwhich authorizes the urgent procedure) afterwards months of waiting and second thoughts on how to proceed. At the end of the month it will be on the table of the extraordinary Council of Energy Ministers of the 27. The document arrives with considerable delay, considering that the individual countries have meanwhile moved in no particular order to finance consumer support measures while gas prices reached overcome the 340 euros per megawatt hour against less than 30 in August 2021. And the work is not yet finished: the president of the Commission Ursula von der Leyen said it will also be developed a “Most representative benchmark” compared to the Ttf and something will be done to “solve the problems” of liquidity of energy companies on derivatives markets. The proposal on the reform of the electricity market will then arrive at the end of the year.

The reduction of consumption – Let’s go back to what could be decided right away. To overcome the winter it is necessary preserve gas reserves as much as possible accumulated so far by reducing electricity consumption, the Commission writes in black and white. For this reason, the regulation sets two objectives for reducing demand: in general, countries will have to take measures to cut demand (for example through information campaigns aimed at consumers). In addition, a mandatory target of “at least 5% reduction of gross electricity consumption during selected peak hours they cover at least 10% of the hours of each month where prices are expected to be higher ”. Each country should select one range of 3-4 hours a day, those at peak or those in which the generation of electricity from renewables is low and to cover the demand gas plants are put into operation. To achieve the objective, which could reduce gas consumption by 3.8%, we should proceed – according to the commissioners’ council – with auctions or tenders aimed at encouraging those who accept a temporary reduction in supplies.

The ceiling on the revenues of producers from renewables and nuclear power – Pending the structural reform of the electricity market, which should detach the mechanism for forming the price of electricity from the cost of “marginal” plants, usually gas, the Commission considers it necessary to temporarily limit “the extraordinary revenues of producers with lower costs”. That is, those who, on the basis of the prices that are formed on the so-called “day-before markets”, collect in these weeks 400-500 euros for each megawatt hour posted on the network in the face of prices that were stable before the Russian invasion of Ukraine under 180 euros. The proposal is to put a ceiling at that level, considered well above the initial expectations of the market and adequate to guarantee producers a “reasonable margin” and not reduce their investment capacity. Producers who sell on the basis of long-term contracts are exempted and therefore do not benefit from the very high prices of these months.

The difference between the market price and the ceiling will be collected by the states and will be used to finance measures such as income support, bill discounts, investments to reduce consumption or national caps on consumer prices. The EU suggests privileging users more vulnerable: this also helps to support the level of consumptionbecause households with lower incomes inevitably spend a greater share of their incomes (the richest have greater ability to savings).

The solidarity contribution for “fossil” companies – The suggested intervention to hit the extra-profits of producers from fossil sources is different. European companies that derive at least 75% of revenues from the sectors of Petroleumof the gasof the coal and of refining “They have seen their profits soar as a result of sudden and unpredictable circumstances related to war, falling supplies and increased demand due to high temperatures,” notes the Commission. This is why a – temporary and exceptional – solidarity contribution is foreseen to be applied to taxable profits. According to Brussels they should not be hit entirely because “they could be used for futures investments or to ensure their financial stability during the energy crisis ”. The proposal is therefore to apply a 33% withdrawal on earnings for 2022 that exceed 20% there average of the last three years. Countries that import all the electricity they consume should still benefit from the tax through “solidarity agreements”, according to the vice president of the European Commission Frans Timmermans,

States “remain free to apply a higher rate if they have already introduced a solidarity contribution, a levy or a tax on the excess taxable profits of energy companies”. As is well known, Italy has introduced a tax of 25% on the higher VAT taxable margin implemented between October 2021 and 30 April 2022 compared to the period October 2020-April 2021. The measure was the subject of numerous appeals and companies they paid only 40% as a down payment 1 billion in the face of 4 expectedso much so that according to rumors the government is studying changes.

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Dear energy, the Commission’s (overdue) proposals: energy companies will finance aid for families and businesses – Il Fatto Quotidiano


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