Council Regulation (EU) 2022/1854 on an emergency intervention to address high energy prices

Summary:

Regulation (EU) 2022/1854 - formally adopted by the Council of the European Union on 6 October 2022 - setting out an emergency intervention in the European Union's energy markets to tackle sharp price rises.

Further information:

Gas and electricity prices reached record levels in 2022, in the aftermath of COVID-19 (coronavirus) restrictions and greatly encouraged by Russia's invasion of Ukraine. Energy prices were expected to remain high due to uncertainty in the market, with knock-on effects across the economy. Availability of electricity generation in the European Union (EU) has also been below usual levels as of late, while energy demand has increased.

This Regulation establishes an emergency intervention to mitigate the effects of high energy prices through exceptional, targeted and time-limited measures. Those measures aim to reduce electricity consumption, to introduce a cap on market revenues that certain producers receive from the generation of electricity and redistribute to final electricity customers in a targeted manner, to enable Member States to apply measures of public intervention in the price setting for the supply of electricity for household customers and SMEs, and to establish rules for a mandatory temporary solidarity contribution from EU companies and permanent establishments with activities in the crude petroleum, natural gas, coal and refinery sectors to contribute to the affordability of energy for households and companies.

Following political guidance provided by the Council of the European Union on 9 September 2022, the draft law was announced by the President of the European Commission during her State of the European Union (SOTEU) address on 14 September. The measures are compatible with the European Commission's REPowerEU Communication, and the Commission's REPowerEU Action Plan presented earlier in the year. Several Member States had already considered the adoption of redistribution measures, but these solely applied at national level and thus might create uneven conditions for companies in the EU energy market. A political agreement between Member States was reached on 30 September, and the draft law was formally adopted by the Council of the European Union on 6 October. The Act was published on the Official Journal on the following day.

• Primary Source

Commentary and Analysis

Pinsent Masons: Out-Law News, 14/09/2022: European Commission plans revenue cap on non-gas power producers https://www.pinsentmasons.com/out-law/news/eu-commission-revenue-cap-non-gas-power-producers

The Economist: Explainer, 15/09/2022: How the EU intends to collect “windfall profits” from energy firms https://www.economist.com/the-economist-explains/2022/09/15/how-the-eu-intends-to-collect-windfall-profits-from-energy-firms

PricewaterhouseCoopers (PwC): Tax Policy Alert, 22/09/2022: EC proposes to address high energy prices through excess profits taxes and consumption reductions https://www.pwc.com/gx/en/tax/newsletters/tax-policy-bulletin/assets/pwc-ec-proposes-to-address-high-energy-prices.pdf

EUObserver: Analysis, 24/09/2022: Investors in renewables face uncertainty due to EU profits cap https://euobserver.com/green-economy/156127

Oxfam International: Press Release, 30/09/2022: EU Energy Windfall Tax: European countries must aim for 50 – 90 percent rate and not let other profiteering industries off the hook https://www.oxfam.org/en/press-releases/eu-energy-windfall-tax-european-countries-must-aim-50-90-percent-rate-and-not-let

S&P Global: Commodity Insights, 30/09/2022: EU energy ministers agree power price mitigation package https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/electric-power/093022-eu-energy-ministers-agree-power-price-mitigation-package

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News

Politico, 14/09/2022: Soaring energy costs trigger radical market shake-up in Brussels https://www.politico.eu/article/ursula-von-der-leyen-state-of-the-european-union-soteu-speech-ukraine-russia-gas-energy-war/

France24, 14/09/2022: EU chief lays out plan to tackle looming energy crisis https://www.france24.com/en/europe/20220914-energy-crisis-to-top-eu-chief-s-state-of-the-union-address

Deutsche Welle, 14/09/2022: EU's Ursula von der Leyen announces cap on revenue from electricity to combat energy crisis https://p.dw.com/p/4GoU8

Reuters, 14/09/2022: EU will propose windfall levies on energy firms, von der Leyen says https://www.reuters.com/markets/europe/eu-will-propose-windfall-levies-energy-firms-von-der-leyen-says-2022-09-14/

Euronews, 14/09/2022: Energy proposals could be 'democratic problem', as MEPs react to von der Leyen speech https://www.euronews.com/my-europe/2022/09/14/energy-proposals-could-be-democratic-problem-as-meps-react-to-von-der-leyen-speech

BBC News, 14/09/2022: Ukraine war: EU moves to cut peak electricity use by 5% https://www.bbc.co.uk/news/world-europe-62899940

Associated Press (AP News), 14/09/2022: Energy crisis: EU chief wants to tap excess producer profits https://apnews.com/article/ursula-von-der-leyen-european-union-commission-0b274c50c67fc25400e11cdbf06a33e9

ERR News, 14/09/2022: Minister: Von der Leyen energy price proposals disappointing for Estonia https://news.err.ee/1608715522/minister-von-der-leyen-energy-price-proposals-disappointing-for-estonia

The Irish Times, 14/09/2022: EU's energy legislation will raise €140bn for member states, says von der Leyen https://www.irishtimes.com/video/world/europe/2022/09/14/eus-energy-legislation-will-raise-140bn-for-member-states-says-von-der-leyen/

Climate Home News, 14/09/2022: EU energy crisis plan: gas price renegotiation and windfall taxes https://www.climatechangenews.com/2022/09/14/eu-energy-crisis-plan-gas-price-renegotiation-and-windfall-taxes/

EUObserver, 30/09/2022: EU agrees windfall energy firm tax — but split on gas-price cap https://euobserver.com/green-economy/156185

Associated Press (AP News), 30/09/2022: EU adopts levy on excess energy profits, no gas price cap https://apnews.com/article/russia-ukraine-business-prices-european-union-b03b8def6fc18bb033177bc551a42a21

Euronews, 30/09/2022: EU approves mandatory energy savings and cap on company revenues https://www.euronews.com/my-europe/2022/09/30/eu-energy-ministers-meet-to-approve-power-savings-and-revenue-caps-to-curb-soaring-prices

The Guardian, 30/09/2022: UK isolated as EU agrees windfall tax on energy firms https://www.theguardian.com/world/2022/sep/30/uk-isolated-as-eu-agrees-windfall-tax-on-energy-firms

Reuters, 30/09/2022: EU countries to back energy windfall levies, lock horns over gas price cap https://www.reuters.com/business/energy/eu-countries-back-energy-windfall-levies-lock-horns-over-gas-price-cap-2022-09-30/

The Irish Times, 30/09/2022: Ireland expects EU windfall energy tax to raise €1bn-€2bn as deal reached https://www.irishtimes.com/world/europe/2022/09/30/eu-members-agree-to-redirect-windfall-profits-of-energy-companies-to-households-and-businesses/

France24, 30/09/2022: EU agrees windfall tax on energy companies and consumption cuts https://www.france24.com/en/europe/20220930-eu-agrees-windfall-tax-on-energy-companies-and-consumption-cuts

RTÉ News, 30/09/2022: EU agrees power consumption cuts and levies on energy firms https://www.rte.ie/news/world/2022/0930/1326297-energy-europe/

BBC News, 01/10/2022: EU agrees windfall tax on energy firms https://www.bbc.co.uk/news/business-63089222

ERR News, 01/10/2022: EU profit tax will not apply to Estonian shale oil producers https://news.err.ee/1608735418/eu-profit-tax-will-not-apply-to-estonian-shale-oil-producers

Le Monde, 04/10/2022: Energy sector profits: Belgium wants to go further than EU https://www.lemonde.fr/en/international/article/2022/10/04/energy-sector-profits-belgium-wants-to-hit-harder-than-europe_5999022_4.html

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Official

EUR-LEX: COM(2022)473: Proposal for a Council Regulation on an emergency intervention to address high energy prices https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=COM:2022:473:FIN

General Secretariat of the Council: Policies: Energy prices and security of supply https://www.consilium.europa.eu/en/policies/energy-prices-and-security-of-supply/

European Commission: Press Release, 14/09/2022: Energy prices: Commission proposes emergency market intervention to reduce bills for Europeans https://ec.europa.eu/commission/presscorner/detail/en/ip_22_5489

European Commission: Questions and Answers on an emergency intervention to address high energy prices (14 September 2022) https://ec.europa.eu/commission/presscorner/detail/en/qanda_22_5490

European Commission: Opening remarks by Executive Vice-President Timmermans and Commissioner Simson at the press conference on an emergency intervention to address high energy prices (14 September 2022) https://ec.europa.eu/commission/presscorner/detail/en/speech_22_5521

Finnish Government: Press Release, 29/09/2022: EU energy ministers decide on measures to reduce electricity prices in winter https://valtioneuvosto.fi/en/-//1410877/eu-energy-ministers-decide-on-measures-to-reduce-electricity-prices-in-winter

Council of the European Union: Press Release, 30/09/2022: Council agrees on emergency measures to reduce energy prices https://www.consilium.europa.eu/en/press/press-releases/2022/09/30/council-agrees-on-emergency-measures-to-reduce-energy-prices/

Council of the European Union: Press Release, 06/10/2022: Council formally adopts emergency measures to reduce energy prices https://www.consilium.europa.eu/en/press/press-releases/2022/10/06/council-formally-adopts-emergency-measures-to-reduce-energy-prices/

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