The European Commission will soon propose a mandatory target for the EU to cut power consumption at peak hours, a revenue cap on electricity producers and fossil fuel companies, and a price cap on Russian gas as immediate measures to save the European gas and electricity markets and help vulnerable consumers, European Commission President Ursula von der Leyen said on Wednesday.
Even though the EU has managed to diversify its imports away from Russian gas - which now accounts for just 9% of EU gas imports compared to 40% before the Russian invasion of Ukraine - "we also see that the manipulation of the gas markets has a spillover effect on the electricity market," von der Leyen said in a speech in Brussels today.
"We are confronted with astronomic electricity prices for households and companies and with enormous market volatility," the Commission President said.
So the Commission will propose a set of immediate measures that will protect vulnerable consumers and businesses. Those measures include savings on electricity, a mandatory target for reducing electricity use at peak hours, and a cap on revenues of companies producing electricity with low costs and rechanneling these unexpected profits to support vulnerable households and companies, von der Leyen added.
The EU will also propose a profit levy on oil and gas companies, too, "Because all energy sources must help address this crisis," she said.
The measures to be proposed also include liquidity support for energy utility companies to cope with market volatility and large margin calls on the energy derivatives market.
"And fifth, we will propose a cap on Russian gas. The objective here is very clear. We must cut Russia's revenues which Putin uses to finance this atrocious war against Ukraine," von der Leyen said.
The EU energy ministers are meeting on Friday when they are expected to discuss a price cap on Russian gas and electricity market reforms such as decoupling the price of gas from power prices.
By Tsvetana Paraskova for Oilprice.com
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