EU lawmakers consider profit cap in case energy prices resurge

Lawmakers in the European Parliament will consider a proposal to cap power plants' windfall revenues if Europe faces another energy price crisis and use the cash to cushion citizens from soaring bills.

The European Union wants to finalize a reform of its electricity market this year to make the system more resilient in the face of price spikes such as those following Russia's invasion of Ukraine last year.

Nicolas Gonzalez Casares, the European Parliament's lead negotiator on the reform, wants to add to it a revenue cap on power producers that would kick in if there is another price crisis.

The cap would recover 90% of any revenue above 180 euros ($198.14) per megawatt hour that generators, including wind, solar, nuclear and lignite plants, earn from selling their electricity into the market, Gonzalez Casares' draft report, seen by Reuters showed.

Cash raised would finance government measures to help consumers - for example, temporary cut-price power tariffs for citizens and businesses.

"It's very important to use these revenues in order to reduce bills for people," Gonzalez Casares told Reuters.

Last year's energy crisis exacerbated inequalities in Europe, as wealthy countries like Germany far outspent poorer nations in public funding to help citizens and companies with soaring power bills.

The draft report said planning the crisis revenue cap in advance would also give investors certainty.

The EU introduced a temporary revenue cap for power plants last year, as an emergency response to high power prices. It drew opposition from companies that said the surprise change in their revenues could deter investors.

The European Commission, which drafts EU policies, proposed its power market reform in March. Gonzalez Casares' report suggests amendments on which the European Parliament will vote in the coming months.

Those it approves will form Parliament's position for negotiations with EU countries on the final reform.

($1 = 0.9084 euros)




Reuters