Energy companies have to pay to relieve the burden on citizens

Created: 09/30/2022, 18:29

Federal Economics Minister Robert Habeck (M) with Hungarian Foreign Minister Peter Szijjarto (l) and Dutch Energy Minister Rob Jetten at the meeting in Brussels.

© Virginia Mayo/AP/dpa

It's getting colder and heating costs are rising.

The EU has been looking for solutions to the energy crisis for weeks.

Now the states have agreed on measures.

But for many, that doesn't go far enough.

Brussels - Energy companies in the EU are asked to pay in view of the increased prices in order to relieve households.

EU energy ministers approved an emergency package on Friday.

On the one hand, binding targets for saving electricity are agreed therein.

On the other hand, it is stipulated that many electricity producers and oil and gas companies will have to pay part of their profits from the crisis to the state.

This money is intended to relieve consumers and companies.

Germany was criticized for its rejection of a European maximum price for gas.

Italy criticizes the German relief package

Federal Economics Minister Robert Habeck warned of supply bottlenecks if an EU-wide gas price cap were to be introduced.

"That's why we need a different solution, a better solution." Germany, for example, together with the Netherlands, opposed the majority of EU countries that are demanding a general maximum price for gas, both wholesale and imports.

Among them are Italy, France, Spain or Belgium.

In Italy, for example, there is criticism that some countries do not have the money to put together large national relief packages.

A European solution is therefore needed.

Czech Industry Minister Jozef Síkela, who chairs the Council of Ministers, also said Friday's resolutions must be followed by others.

"That's just the first part of the puzzle." The states had asked the EU Commission to submit proposals for further measures.

EU Energy Commissioner Kadri Simson also said market intervention at EU level was necessary to lower prices for customers.

However, she warned against drastic interventions such as a price limit in European wholesale.

"This would clearly have an impact on prices, but it would also effectively suspend the EU gas market and pose significant risks to security of supply."

Various options are now to be discussed.

The EU Commission is expected to make more concrete proposals before the summit of heads of state and government next week.

On the other hand, the measures decided to skim off profits met with broad approval.

"We will quickly implement them in Germany," said Habeck.

The federal government wants to use the money collected to make electricity available to citizens, some of it cheaper - in addition to the relief package with a volume of up to 200 billion euros, which was announced on Thursday.

It is still unclear how much money will come from the profit skimming in Germany.

The EU Commission recently assumed that the measures for the entire Union would amount to 140 billion euros.

There should also be a savings goal

Since the price of gas has risen sharply against the background of the war in Ukraine, electricity has also become more expensive.

Because the electricity price is determined by the most expensive power plant that is switched on for production - currently these are mainly gas-fired power plants.

Producers of cheaper electricity - for example from the sun, wind, nuclear power or lignite - can sell it at high prices.

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The revenues of these companies will now be capped at 180 euros per megawatt hour until the end of June 2023.

However, the states have more flexibility in the implementation of the cap than originally intended.

If necessary, they can introduce a lower revenue limit for certain technologies - or a higher one if the costs of the producers exceed the limit of 180 euros.

For example, there could be different caps for producers of electricity from the sun or lignite.

In addition, the measures will affect not only the producers of cheap electricity from renewable and other sources, but also oil, coal and gas companies and refiners.

They are to pay a solidarity levy of 33 percent on profits that were 20 percent above the average for the past four years.

This can either refer to profits this year or next year or both years.

The money should also be used to finance relief for citizens and companies.

The ministers also approved a mandatory electricity savings target of five percent in times of high demand.

Then electricity costs a lot because gas has to be used for production.

However, the states also gave themselves more freedom to determine these peak hours.

Overall, the EU countries should voluntarily reduce their electricity consumption by ten percent.

Friday's agreement has yet to be formally approved.

That is expected in the coming week.

The measures can then come into force in December.

dpa