EU to skim energy company revenues but no price cap for now

The EU is to skim excess energy company revenues rather than impose a price cap such as the one opted for in the UK.

European energy ministers met on Friday, September 9 to flesh out proposals to contain energy price inflation and to support households and businesses through a price cap.

The European Union executive, however, turned down the proposal suggesting instead that ways should be considered to skim off the excess revenues or profits of energy companies.

The details of such a windfall plan, have yet to be fleshed out but could see governments skim off excess revenues from wind, nuclear and coal-fired power plants.

The cost of producing these forms of energy is not affected by the Russian gas crisis, however, all energy is sold at a higher price than energy produced using gas. That model means many energy producers are recording enormous revenues and massive profits.

Fossil fuel companies would not be exempt from being required to pay a “solidarity contribution”.

Irish Environment Minister Eamon Ryan told Reuters: “Taking some of those excess profits and recycling them back into the households makes sense.”

According to Czechia Industry Minister Jozef Sikela the ministers are likely to hold another emergency meeting later this month to approve windfall proposals.

Russian President Vladimir Putin had warned that a price cap would result in the supply of gas being turned off permanently, a move that scared those countries who are more reliant on supplies from Russia.

Hungarian Foreign Minister Peter Szijjarto confirmed the fears saying: “If price restrictions were to be imposed exclusively on Russian gas, that would evidently lead to an immediate cut-off in Russian gas supplies.”

EU Energy Commissioner Kadri Simson confirmed those fears saying: “We have to take care that we will not jeopardise our security of supply situation.”

Russian gas supplies are at an all-time low having fallen by nearly 90 per cent. That has led to accusations that Russia is blackmailing the EU, however, Gazprom Russia’s gas company has blamed sanctions for their inability to maintain the pipelines.

EU citizens and businesses will be dismayed to hear that there is still no resolution to the cost of energy but will be pleased to hear that the EU wants to skim energy company revenues to help keep prices down.

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