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EU member states are discussing the idea of capping the power generation revenues at renewable and nuclear power producers at up to $203 (200 euros) per megawatt-hour as part of an emergency package, sources with knowledge of the discussions told Bloomberg on Tuesday.
The EU’s executive body, the European Commission, is expected to present on Wednesday its proposals for emergency measures to tackle the energy crisis and help EU households and businesses survive soaring energy prices.
Last Wednesday, the Commission said it would 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 a part of that package.
However, by Friday, when the EU energy ministers held an extraordinary meeting, deep divisions among member states emerged regarding price caps, especially the cap on all gas or Russian gas only. At least 10 EU member states, including Italy, Greece, and Poland, are said to be opposed to the bloc slapping a price cap on Russian gas over concerns that Putin might retaliate with a complete halt of gas supply to the whole of Europe.
While the idea of the Russian gas price cap may be dead in the water, the EU is reportedly pushing forward with a levy on fossil fuel companies and targets for reducing power consumption, according to Bloomberg’s sources.
The European Commission plans to propose a temporary tax on the extra profits of fossil fuel companies, including the refining industry, of at least 33% of those extra profits, Bloomberg’s sources say.
The Commission will also propose a 5% cut in power consumption at selected peak hours - a target that would be mandatory, the source added.
The Commission’s proposal needs to be given the green light by all EU governments.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.