The 27 achieve a European pact to make electricity cheaper and reduce income to energy

The EU bloc has agreed to reduce electricity consumption by 10%, as well as tax 33% of the extraordinary profits of companies

The governments of the European Union have reached an agreement on Friday on emergency measures to lower electricity bills that go through a reduction in electricity consumption, a cap on revenues from renewables, nuclear and coal and a tax on oil companies.

The Energy Ministers of the Twenty-seven achieved this political pact just an hour after the beginning of the extraordinary meeting and approved “without changes” the last draft that had reached the table in which the delegations had been working for several weeks, community sources said.

“Deal! Ministers reached a political agreement on measures to mitigate high electricity prices: a mandatory reduction in demand, a cap on the incomes of under-marginal electricity producers and a solidarity contribution from fossil fuel companies,” the Czech Republic, which holds the rotating presidency of the EU, announced on Twitter.

The political agreement sets a reduction in electricity consumption of 10% compared to normal demand with a mandatory reduction of 5% at peak times where the price is higher, but with flexibility for Member States to calculate those sections.

The regulation, which will be officially processed over the next few days and will enter into force thereafter, sets that electricity saving between December 1, 2022 and March 31, 2023.

This is the only measure of the three agreed that directly affects Spain, because in relation to the tax and the cap on generation with infra marginal technologies (renewable, nuclear and lignite), countries that already have or will approve similar initiatives will be able to preserve their own designs.

With regard to the EU’s “solidarity contribution”, it will tax 33% of the windfall profits of oil, gas and refinery companies. These gains are defined as profits that exceed 20% of the average recorded in the last four years.

The final wording of the text specifies that this tax may tax the extraordinary profits of both 2022 and 2023 after countries such as Sweden asked to include next year because their legislation prevents approving taxes levied on current years.

Unlike the European one, the measure pending in Spain taxes with a rate of 1.2% the annual income of large electricity, gas and oil companies.

On the other hand, the ceiling on infra-marginal technologies within the wholesale electricity market agreed in the EU is set at 180 euros megawatt hour (MWh), but leaves the door open for countries to place it below (Spain has it at 67 euros) or even above if any technology has higher production costs.

The revenues generated by both measures (the tax on oil companies and the cap on revenues in electricity auctions) will be used to develop support measures for households and companies most affected by the energy crisis.

Source: El Liberal