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On October 6, 2022 the European Council adopted Regulation (EU) 2022/1854 as an emergency intervention to deal with high energy prices in the European Union.

Rise in prices is addressed acting on multiple fronts at once. Among other measures, the Regulation provides for (i) a reduction of monthly and peak price hours gross electricity consumption; (ii) mandatory cap of €180/MWh on revenues of inframarginal electricity producers.

As highlighted by President von der Leyen in her statement on September 7, 2022:

“We will put forward a set of five different immediate measures. The first one is smart savings of electricity. What has changed over the summer, because of the elements I was just mentioning, is that we see that there is a global scarcity of energy. So whatever we do, one thing is for sure: We have to save electricity, but we have to save it in a smart way. If you look at the costs of electricity, there are peak demands. And this is what is expensive, because, in these peak demands, the expensive gas comes into the market. So what we have to do is to flatten the curve and avoid the peak demands. We will propose a mandatory target for reducing electricity use at peak hours. And we will work very closely with the Member States to achieve this.

The second measure: We will propose a cap on the revenues of companies that are producing electricity with low costs. The low-carbon energy sources are making in these times – because they have low costs but they have high prices on the market – enormous revenues. Revenues they never calculated with; revenues they never dreamt of; and revenues they cannot reinvest to that extent. These revenues do not reflect their production costs. So, it is now time for the consumers to benefit from the low costs of low-carbon energy sources like, for example, the renewables. We will propose to re-channel these unexpected profits to the Member States so that the Member States can support the vulnerable households and vulnerable companies”.

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