Brussels opens the door to extraordinary measures to lower electricity

The European Commission is studying the need to reform the energy pricing system and the proposal for an extraordinary joint gas purchase in the face of pressure from the Spanish and French governments, which call for a joint European response to the unprecedented increase in cost, and despite Germany’s reluctance.

They said so in Slovenia, President Ursula Von der Leyen, and in Strasbourg, its energy minister, Karin Simson, who confirmed that the Commission will present a battery of measures next week, which could go beyond national actions that states can put in place. Brussels thus responds to pressure from a good number of countries, with Spain, France, the Czech Republic, Romania and Greece leading the way.

“We have to study the possibility of decoupling the market, because we have much cheaper energy, such as renewables”

“If electricity prices are high, it is because gas prices are high, and we have to study the possibility of decoupling the market, because we have much cheaper energy, such as renewables,” von der Leyen said on Tuesday and reconfirmed on Wednesday that the Commission will address the entire price system.

“We have asked the Commission to find a way to dissociate the price of gas and the price of electricity,” Vice President and Minister for the Ecological Transition Teresa Ribera explained in a meeting with the press, on the margins of the Council of Environment Ministers. According to government sources, this could translate either into taking the price of gas out of the price of electricity in the wholesale market or by reintroducing a cap on the price of electricity, which existed in Europe until June of this year.

In any case, Spain considers that the measures should be temporary and maintained as long as the situation continues. “When we refer to exceptional measures, in exceptional situations, we are not talking about anything that has not been done before. It has happened with the spending rule, in special moments that we have lived outside of normality,” the vice president argued.

“In parallel we have to ensure that Europe has enough gas supply and at a reasonable price this winter and that is why we have proposed that there be a joint purchasing platform for all European gas operators who want to join this initiative, which allows the European Union to negotiate,” Insisted Ribera, to avoid that hysteria in the markets for fear of supply cuts ends up having an impact on the price. of gas.

Differences between countries

The Energy Commissioner insisted in her speech to the European Parliament on Wednesday that countries can “offer specific aid to consumers, direct payments to those most exposed to energy poverty, cut taxes on energy”. State aid to companies can also be implemented or, in the medium and long term, energy purchase agreements can be facilitated. And he adds that increasing revenues through emissions in the carbon market gives countries fiscal space to do so.

But some states, such as Spain, Portugal or Greece, which have implemented a good part of these measures, are beginning to fall short and ask for a direct, extraordinary and temporary European intervention of the markets. According to government sources, the Commission is increasingly aware of the social alarm that has been generated by soaring energy prices and is beginning to open itself to this possibility because it is aware of the political cost of doing nothing.

However, the countries of the European Union, with different markets and different structures, experience the impact of rising prices at a different rate and are reluctant to intervene directly. Germany, for example, is open to each country managing the crisis as it sees fit, but is concerned that adjustments will be made that could have a long-term impact on the market.

Source: The Economist