The EU plans to cap soaring electricity prices

European Commission President Ursula von der Leyen gathers with EU commissioners at a meeting at the European Parliament in Strasbourg, eastern France, Tuesday, Sept. 13, 2022. (AP Photo/Jean-Francois Badias)
By M B
3 Min Read

With some governments already moving to cap electricity prices, the European Commission will now propose an even lower cap on the price of electricity than proposed in countries like Czechia.

Czech Prime Minister Petr Fiala announced on Monday that they would set the maximum possible electricity price at six korunas (€0.24) per kilowatt-hour, however, the European Commission proposal, available to Reuters, shows that Brussels should propose a price cap of €180 per megawatt hour. That corresponds to 4.42 korunas (€0.18) per kWh.

The European Commission should present the resolution on the maximum possible electricity price on Wednesday in Strasbourg. In it, the executive of the European Union also expects to collect 33 percent of excess taxable profits from fossil fuel producers. Member countries should use the money obtained in this way to reduce prices, especially for vulnerable households and companies.

According to the proposal cited by Reuters, the price cap would apply to solar, wind, nuclear, or lignite power plants, as well as producers of electricity from biomass. In other words, all non-gas producers.

Half off the August price of electricity

The maximum price will be at a level corresponding to approximately half the price at which electricity was sold in Europe in August. Last week, mainly thanks to favorable developments around gas reserves on the continent, the price of this raw material fell below €200 per MWh for the first time since the beginning of August. In August, the wholesale price of gas temporarily reached €350 per MWh.

In addition to the mentioned measures, the European Commission intends to set the parameters of the mandatory limitation of electricity consumption in the proposal, which should cover regular operation and the busiest hours. Representatives of the national governments belonging to the EU will discuss the proposals at the upcoming extraordinary meeting called by Czech Minister of Industry and Trade Jozef Síkela on Sept. 30.

The price of gas is still free

On the other hand, the European Commission responded to the content of a leaked document that it does not yet plan to cap gas prices. The final text is still subject to change, but the proposal exposes the commission’s doubts about whether it will get enough support from EU member states for the preferred price cap option.

Share This Article