EU seeks to cap energy company profits and cut electricity use

Excess profits of energy companies should be rechannelled to support vulnerable households, von der Leyen says

The European Union should “rechannel” the excess profits of energy companies to help vulnerable households and companies and introduce “mandatory” reduction of electricity use at peak times, European Commission president Ursula von der Leyen told journalists on Wednesday.

“We will propose a cap on the revenues of companies that are producing electricity with low costs,” the commission chief told journalists ahead of a meeting of the 27-member-state energy ministers on Friday to consider a sweeping EU-wide intervention on energy markets.

“We will propose to rechannel these unexpected profits ... so that the member states can support the vulnerable households and vulnerable companies.”

In addition, “we will propose a mandatory target for reducing electricity use at peak hours,” Ms von der Leyen said. In the EU, gas and electricity plants are activated at peak times to cope with surges in demand, meaning that if usage is reduced at those moments, the use of expensive gas can be avoided.

READ MORE

The commission will ask member states to introduce “smart” energy savings, limiting the use of electricity at peak hours.

It will also propose placing a cap on the price that can be paid for Russian gas.

Dr von der Leyen described current electricity prices as “astronomic” and said that energy companies were earning profits that they never expected and that were detached from the price of the producing of electricity.

These “enormous revenues” should be redirected to member state governments to dole out to vulnerable households and businesses, Ms von der Leyen said, and should also be invested to develop “clean homegrown energy sources”.

The commission chief accused Russia of “actively manipulating the gas market” as well as being an unreliable supplier.

Energy and electricity costs have ballooned over the past year, with Russia cutting off gas supplies to a series of European Union countries as it pressures the West to drop the sanctions imposed due to its invasion of Ukraine.

Despite the cuts to the gas flow from Russia, which accounted for 40 per cent of the EU’s gas supply until last year, filling of the EU’s gas storage facilities has now reached 82 per cent, she said. “We were able to completely compensate so far the gas imports through other reliable suppliers.”

Naomi O’Leary

Naomi O'Leary

Naomi O’Leary is Europe Correspondent of The Irish Times