In response to the still extremely high and volatile energy prices, the EU Commission announced additional short-term intervention measures in the market. The AK welcomes the proposed measures. It is now up to the Member States to take them up and to implement them as soon as possible. Following the example of Spain and Portugal, it would be particularly beneficial to introduce a price cap for electricity-generating gas power plants. Such a cap would significantly lower the electricity price and take the pressure off the economy.
By presenting the Communication on Short-Term Energy Market Interventions and Long-Term Improvements to the Electricity Market Design on 18 May 2022, the EU Commission submitted a number of measures to tackle high energy prices and to overcome possible gas supply interruptions by Russia. Apart from that, the electricity market shall be made more resilient against price shocks while consumers shall be protected and supplied with affordable electricity. This Communication is the third toolbox, which has been presented by the EU Commission, comprising important options to cushion the high energy prices. The first was issued in October 2021, the second in March 2022.
Short-term intervention measures on gas and electricity markets
The measures in respect of gas markets, presented by the EU Commission, include the option for EU Member States, to temporarily apply the regulation of end consumer prices to households and the industry. Later, these measures may also be applied to electricity markets, and be regulated not only for households, but for small and medium enterprises. Current applicable temporal limits were suspended. Hence, levying crisis-induced surplus profits (so-called “windfall profits”) and their redistribution to consumers after 30 June 2022. Limiting gas prices for gas power plants to reduce the electricity price shall be possible under certain circumstances for regions with limited Interconnection capacity. However, if the situation escalates, an EU-wide implementation will also be possible.
In the case of Russia completely interrupting gas supplies, the EU Commission urges EU Member States to update their emergency plans. In this context, the EU Commission would like to facilitate drawing up a coordinated EU Plan to reduce demand by preventive voluntary control measures. Hence, less affected EU Member States could reduce their gas demand for the benefit of more impacted Member States.
AK demands to separate gas prices from electricity prices
The AK welcomes the measures presented by the EU Commission and demands EU-wide, or at least collectively for Austria and Germany, the introduction of a gas price cap following the Spanish-Portuguese example. Even though almost 80 % of Austrian Electricity is based on renewable energies, the current extremely high gas prices are directly reflected in electricity prices, having a respectively serious impact on gas and electricity customers. In the AK’s view, this connection must be broken to give sustainable relief to electricity consumers. Following the example of Spain and Portugal, it is therefore necessary to speedily introduce a gas price cap for electricity-generating gas power plants in order to reduce electricity prices. Both countries are capping the current gas price for gas power plants of over 200 Euro per MWh to initially 40 Euro per MWh and subsequently to 50 Euro per MWh. This results in the electricity price being reduced to about 100 Euro per MWh. Hence, the positive effects of lower electricity prices for private households, business customers, but also for the energy-intensive industry, would have a strong impact. Lower electricity prices would also ensure that investments in heat pumps, electric cars or the generation of green hydrogen are worthwhile, and that electric rail transport remains compatible. However, electricity prices remain high enough to create sufficient incentives for investments in renewable energy – even without subsidies. The financial outlay would be relatively low as the gas price cap would only need to be introduced for a small number of price-controlled gas power plants. The cost incurred could be financed by a special tax, which shall affect those companies that continue to generate high crisis-induced surplus profits.