LAST UPDATE | 9 Sep 2022

EU MINISTERS HAVE pledged to come up with unprecedented measures in the coming days to solve an energy price shock triggered by Russia’s war on Ukraine, including a controversial gas price cap that could further anger the Kremlin.

The bloc’s energy ministers met today to forge a united response to the energy shock from Russia’s war on Ukraine that has sent prices for electricity and heating skyrocketing.

Moscow’s invasion has seen the price of natural gas hit record levels, throwing the EU economy into deep uncertainty with all eyes on whether Russian President Vladimir Putin will cut off the energy flow entirely.

The EU will table “unprecedented measures next week for an unprecedented situation”, energy commissioner Kadri Simson said, after meeting the ministers.

Simson said compensation for struggling households and businesses would be covered by a levy on non-gas electricity companies, such as nuclear, solar or renewable firms, that are seeing a revenue bonanza on the back of high prices for electric power.

The market price of electricity in Europe is closely linked to the gas price, meaning non-gas utilities are enjoying huge revenues despite far lower costs.

Simson said fossil fuel companies would also be levied on their mega profits from the inflated energy prices.

Despite heated debate among European countries, the EU will also attempt to lower the price on natural gas, possibly through a price cap on Russian imports or through negotiations with other suppliers.

Speaking to The Journal after today’s meeting, Energy Minister Eamon Ryan said the meeting was “positive” and that he expected to see results produced in a “matter of weeks”.

He said that there were two proposals in particular that align with the Irish government’s aims. 

One of those is a “solidarity payment”, which is being sought from European oil and gas companies that have made extraordinary profits from the rise in energy costs.

The minister said this money would be funneled back to householders and businesses. 

When asked if this would be a mandatory contribution gas companies will have to make, Ryan said it will involve a European-wide mandated system that “would have to be delivered upon”.

The payments would have to be made swiftly and not take months to administer, he added. 

Ryan said the exact level of the contribution gas companies will have to make will be decided within weeks.

The Irish Government also backs the idea of taking some of the excess profits that companies in the oil and wind sectors are making, due to the gas markets setting the price.

EU chief Ursula von der Leyen on Wednesday urged member states to agree a price cap on Russian gas, a measure that Putin has warned would be “an absolutely stupid decision”.

This coming autumn, “when we’re really going to see the high prices having effect, that’s when we need the support, that’s when we need to get some of that money”, he said, stating that there is no time for delay.

One proposal that has broad backing in the EU is an idea to rescue electricity companies that are struggling to hedge their spending on energy markets that have been extremely volatile.

This would be done by relaxing EU rules on state rescues of companies that are suddenly facing more onerous terms for cash as fears of a crisis spread.

The commission will also design a mechanism to cut back on energy demand, with mandatory cuts imposed if voluntary limits at peak hours fail.

“Member states are us usually very reluctant to support binding measures, but this is exactly what Commission is considering,” Simson said.

The commission, which draws up laws that are then ratified by member states and the European Parliament, will likely make its proposals as early as Tuesday.

“We will have a busy weekend and first days of next week before the final product…will be really ready,” Simson said.

With reporting by – © AFP 2022 and Hayley Halpin