EU Deputy Looks to Cap Windfall Profit in Power Price Crisis
(Bloomberg) -- The European Union should strengthen its emergency rules so that citizens don’t bear the brunt of surging electricity prices during a crisis, said a key lawmaker who’s pushing for more market intervention in upcoming reforms.
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The bloc should allow for the revenues of renewable energy producers like wind and solar, as well as nuclear, to be capped during an energy crisis, according to a draft report compiled by Nicolas Casares, the socialist lawmaker leading negotiations for the European Parliament, and seen by Bloomberg.
The cap should be set at 180 euros ($195) per megawatt hour — the same level as agreed for temporary regulation in 2022 that helped deal with record high prices in the wake of Russia’s invasion of Ukraine.
The report marks the first look at how the parliament will try to amend the proposal put forward by the European Commission, the bloc’s executive arm, in March. A vote among lawmakers at committee level is targeted for July, with parliament set to agree on its overall position after the summer. Deputies will then enter talks with EU member states over the final shape of the reform, a deal on which is expected to be reached before regional elections in 2024.
Read more: EU Seeks to Cut Energy Costs in Push to Lure More Investment
“When it comes to emergency measures, the proposal from the commission has a lack of ambition,” the Spanish lawmaker said in an interview. “It has to be clear, that this money of the revenue cap should go to consumers, with priority for vulnerable consumers.”
Casares is also pushing to soften the criteria for when a crisis can be declared: Wholesale prices should be at least two times the average of the previous five years and expected to continue at those levels for at least three months. The Commission had put forward a formula reflecting a price increase of 2.5 times, and a period of six months. Such a scenario would allow member states to intervene and set prices for consumers.
The reform is designed to accelerate investments in renewable energy, which is core to the EU’s plans to cut carbon emissions by 55% this decade. It also includes measures designed to lower prices for industry over the long term as part of its push to make sure that clean technology sectors do not get outsourced to the likes of the US and China.
(Updates with table after final paragraph.)
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