EU Members Have Announced Their Own Support Schemes To Help Consumers Both Households And Companies To Pay Their Energy Bills
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Member states are being asked to reduce gas demand by 15% and electricity consumption by 10% with an additional 5% during peak hours compared to longterm averages. According to ENTSO-E statistics, a decline in power demand started at the end of 2021. The Netherlands led the way in reducing electricity consumption the most by the end of the third quarter of 2022, seeing a -10% drop. Poland was not far behind with -7.5%, and France at 4%. The Netherlands has also reduced gas consumption by 30% as households lower their thermostats and industries substitute energy sources or even curtail production where high gas usage makes production unprofitable.
Power proposals
• Price cap on electricity: The EU proposes a €180/MWh day-ahead wholesale price cap for low-cost technologies. The scheme is expected to bring some €140bn in excess revenues that would be redistributed to the final energy consumers. The biggest European power producers will not be much impacted by the measure. As seen above, European integrated utilities do sell forward large amounts of future production at fixed prices. Despite being higher than those sold forward a year ago, pre-sold prices for 2023 remain below €100/MWh.
• Joint gas storage: as of today, about 85% of gas storage capacity across Europe is filled. In the future, the EU Commission would like to establish a joint LNG capacity purchasing system and targets for gas storage levels.
• Taxes on fossil fuel companies: EU members will apply additional taxes to fossil fuel suppliers given that the current crisis partly fuels higher profits from surging oil and gas prices. A number of countries have already announced their taxation plans with Italy, for instance, applying a 50% tax on windfall profits on some 7,000 energy providers from 2023 onwards.
• Hydrogen: €3bn funds to facilitate hydrogen development in order to switch from a niche market to a mass market product.
• A price cap on wholesale natural gas has been debated for a long time, with EU members voicing concerns about a mechanism and price level that could threaten the security of supply.
Government support schemes for consumers are rather positive
Government support and subside schemes help utilities too. They allow companies to keep bad debt under control. Parts of the announced support schemes are expected to be financed by caps and tax systems that will bring financial proceeds to governments. In its latest roadmap for measures concerning energy inflation, the European Union is proposing a €40bn programme to which EU country members can apply in order to support their national consumers.
A significant number of EU members have announced their own support schemes to help consumers both households and companies to pay their energy bills. Risking criticism from other European countries, Germany announced it would make as much as €265bn in subsidies available. Between September 2021 and the end of November 2022, the United Kingdom communicated a total cumulative budget of €97bn and France €69bn. As far as Italy is concerned, the country will dedicate as much as €91bn on a cumulative basi s as the government recently announced an additional package worth €35bn, partially financed by taxes on energy firms’ windfall profits
Cumulative budgets announced by EU governments to shield consumer enterprises from rising energy prices .
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