All measures frozen by the EU Energy Council. Italy and France isolated
How the EU Council discusses and divides itself on energy and price cap at the price of gas. The in-depth analysis by Simona Benedettini, economist and expert in energy markets, taken from her Twitter profile
The proposal to introduce a cap on the price of Russian gas will not be discussed this week by the European energy ministers: it will be up to European leaders, who will meet on 6 and 7 October in Prague for an informal summit and then again on 20 and 21 October in Brussels, make a final decision. The ceiling on the price of gas, therefore, is postponed to October. That is to say at the next informal European Council to be held on the 6th of next month in Prague. There is still no agreement between the 27. In particular, the northern countries, starting with the Netherlands and Denmark, are still not convinced of the solution proposed in recent months by the Italian prime minister, Mario Draghi. In fact, after some hesitation, even Germany did not support the proposal of Italy and France .. ( Startmag editorial team )
HERE IS THE INSIGHT OF SIMONA BENEDETTINI:
The President of the European Commission Ursula von der Leyen yesterday anticipated the measures that will be the subject of discussion at the EU Council on 9 September. Here is the statement .
The measures anticipated by the President of the Commission:
A) reduction of electricity consumption;
B) ceiling on revenues from electricity generation plants other than gas plants;
C) fixing of electricity sales prices;
D) taxation of extra-profits of energy companies;
E) guarantees to support the financial stability of utilities;
F) cap on the import price of Russian gas.
Measures A), B), C) are described in a proposal for a Regulation of the European Council circulated in a leaked version in these days. Therefore it is possible to give some anticipation.
It is not yet possible to find detailed information on measures D) and E).
On measure F): here a detail .
A) Reduction of electricity consumption
Each member state would set a target of reducing the monthly net electricity consumption of at least 10% compared to the average of the net consumption observed in the corresponding five months of the reference period.
The reference period is identified with the months from 1 November to 31 March of the five years preceding the entry into force of the Regulation, starting from the year 2017-2018.
For each month, each member state should identify in advance a number of peak hours ranging from a minimum of 10% to a maximum of 15% of all hours of the month. The reduction in consumption must be activated in the peak hours thus identified.
The peak hours will likely be defined (but the European Commission has not yet provided a precise indication on this) as the hours when electricity prices exceed 200 € / MWh.
The reduction in electricity consumption during peak hours can be offered, for remuneration and through bankruptcy procedures (auctions), by all types of end customers. So both from businesses and from domestic customers.
Existing mechanisms for reducing electricity consumption can be used for this purpose. In Italy, for example, a similar service is already offered by industrial customers to the transmission grid operator (Terna).
B) Cap on revenues from electricity generation plants other than gas-fired plants
Member states should adopt a ceiling of 200 € / MWh. The Commission has not yet precisely identified the amount of revenue to be used for the application of the roof.
Technologies affected by the roof: wind, photovoltaic, solar thermodynamic, geothermal, hydroelectric (running water), biomass, biogas, lignite, fuel oil; nuclear power plants. Member states can exclude plants with installed power <20kW.
Revenues that exceed the ceiling must be returned by the operators and used to finance temporary measures to support domestic customers: eg discounts on bills, support for investments in renewables and storage systems.
In Italy, the European Council Regulation could lead to a review of art. 15 bis of the Sostegni Ter Decree which introduced a measure very similar to that proposed by the Commission. Here detail on art. 15 bis .
C) Fixing the selling prices of electricity
Possible temporary application by member states of electricity pricing measures for household customers and SMEs (up to 80% of consumption).
The price could also be set below the suppliers' procurement costs. In this case, suppliers should be compensated for losses resulting from the sale of electricity below cost.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/commissione-ue-prezzi-elettricita-tetto-ricavi/ on Fri, 09 Sep 2022 06:16:59 +0000.