The European Union’s energy ministers have reached an agreement on crisis measures that are intended to curb the price of energy.
The EU’s Energy Council approved a resolution according to which member countries are forced to reduce their electricity consumption by five percent at peak times.
The reduction obligation enters into force on the first day of December and continues until the end of March. The member states themselves can decide how to implement the reduction in consumption.
“This is the most important thing and the fastest way to reduce the price of electricity”, the Minister of Economic Affairs who represented Finland at the meeting Mika Lintilä (central) stated.
The energy ministers also found a political consensus on the electricity yield ceiling. The council decided to set the yield ceiling at 180 euros per megawatt hour.
The yield ceiling applies to so-called inframarginal producers. They produce electricity with, for example, renewable forms of energy, nuclear power and lignite. The ceiling does not apply to plants that generate electricity with natural gas or coal.
The ministers also agreed that a mandatory, temporary solidarity fee will be introduced. It would apply to the profits of companies active in the crude oil, natural gas, coal and refinery businesses.
However, according to Mika Lintilä, the solidarity fee would not apply to a single company in Finland.
Companies with more than 75 percent of their business from fossil energy have to pay it.
According to Lintilä, the atmosphere of the meeting was uniform. The emergence of a political consensus indicates that Europe’s energy situation is being taken seriously.
“The situation is about to surpass even the corona pandemic in its difficulty,” Lintilä said.
He said that he emphasized in his own speeches that the commission should bring more proposals to the table on how to lower consumer prices for electricity.
“Setting a technical price ceiling for the wholesale market and easing the collateral requirements would be two effective means. We have been trying to drive them for a long time.”
The Commission estimates the revenue at 140 billion euros
The EU’s actions are not intended to affect the wholesale market or customer prices of electricity.
The Commission’s idea is that the new measures would collect money, which the member countries would distribute to the most vulnerable households and companies.
The EU Commission has estimated that the member states would be able to collect a total of around 140 billion euros in revenue with the income ceiling and solidarity payments.
The energy industry reminds us that no one can yet know how much income will actually accrue. They are paid to the member countries afterwards.
Minister Lintilä considers the commission’s estimate of 140 billion in revenue to be exaggerated. According to him, the estimate of what kind of income the Finnish state could get is also fragile.
“In the case of Finland, it is about tens, at most a hundred million euros.”
The EU Commission has taken the matter forward by referring to the emergency Article 122 of the Treaty of the Union. Passage required that two-thirds of the member states support the motion. The use of the emergency article made it possible to ignore the role of the European Parliament.
“Extremely difficult to implement”
The energy industry has been concerned about how the practical implementation and monitoring of the electricity yield ceiling will be implemented in Finland in such a short time frame.
Director General of the Energy Department of the Ministry of Labor and the Economy Riku Huttunen states that in Finland it is practically a tax. A national windfall tax is also being prepared in Finland.
“It is true that this is extremely challenging. We need to see how this is possible to do with the tax department of the Ministry of Finance. The implementation is in a big hurry.”
According to him, facilitations were made at the meeting, which will help in how Finland can take into account the fact that it is possible to purchase electricity sensibly in the electricity reserve market.
EU countries condemn Nord Stream sabotage
This week, four leaks have been detected in the Nord Stream pipelines that transport natural gas from Russia to Europe. Many experts are of the opinion that there must be a state actor behind them.
According to Lintilä, the ministers discussed Nord Stream in their corridor speeches.
“The situation needs to be investigated as quickly and thoroughly as possible,” says Lintilä.
According to him, the sabotage that took place will receive the full judgment of the EU countries.
“We also emphasized the crisis resistance of the entire energy system. This [Nord Stream] was an indication of how this situation can be shaken.”
The story was clarified at 17:23. Added information that the solidarity fee applies to companies with more than 75 percent of turnover generated from fossil energy.