EU planning five 'immediate moves' to tame runaway energy prices

European Commission president Ursula von der Leyen said Europe is 'confronted with astronomic electricity prices for households and companies and with enormous market volatility' which she blamed on Russia's invasion of Ukraine and climate change. File picture: AP/Virginia Mayo

The EU will make five "immediate moves" to tame runaway energy prices, the European Commission President has announced.

Ursula von der Leyen said the EU will:

• put a price cap on Russian gas
• bring in a mandatory target for states to reduce peak demand 
• place a cap on the revenues of electricity companies who are using low-carbon fuels
• ask for a "solidarity contribution" from fossil fuel companies who are making massive profits
• allow countries to give liquidity supports to utility companies.

Ms von der Leyen said Europe is "confronted with astronomic electricity prices for households and companies and with enormous market volatility" which she blamed on Russia's invasion of Ukraine and climate change.

She said Russia is "an unreliable supplier and is manipulating our energy markets" but added that European unity and solidarity "will ensure that we will prevail".

The European Commission President said the bloc has increased preparedness and weakened Russia's grip on its energy supply through demand reduction and diversification of supplies. For example, she said, Norway is now delivering more gas to the EU than Russia.

She said that the EU will propose a "mandatory target for reducing electricity use at peak hours" and will "work closely with the Member States to achieve this" as well as capping the revenues of low-carbon electricity providers. 

She said that these companies are making profits which do not represent the cost of production of their electricity, consumers must feel the benefit of low-cost production and that countries should "re-channel these unexpected profits to support vulnerable people".

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"Oil and gas companies have also made massive profits. We will therefore propose a solidarity contribution for fossil fuel companies," she said.

Ms von der Leyen took particular aim at Vladimir Putin in her speech, saying the EU must turn itself off Russian gas because sales of it are being used to fund the war in Ukraine. She said the EU will cap the use of Russian gas.

"The objective here is very clear. We must cut Russia's revenues which Putin uses to finance this atrocious war against Ukraine. And now our work is paying off. At the beginning of the war, Russia's pipeline gas was 40% of all imported gas. Today it is now down to only 9% of our gas imports. 

"These are tough times. But I am convinced that Europeans have the economic strength, the political will, and unity to keep the upper hand."

Blackouts

Meanwhile in Ireland, emergency drills to test Ireland's readiness for blackouts will be held this Friday and the following Friday.

A statement from the Department of Energy said the running of such exercises "is in compliance with EU legislation on security of energy supply and also forms a key part of Ireland’s preparedness for potential disruptions to gas or electricity supplies, however unlikely or remote the possibility of such disruptions may be".

During these exercises, various hypothetical scenarios are considered and responses are stress-tested.

"These emergency exercises, as before, will involve key stakeholders in the energy sector, including Gas Networks Ireland, EirGrid, ESB Networks, and the Commission for Regulation of Utilities (CRU). This year, a joint exercise will involve bodies from both the gas and electricity sectors – reflecting a broadening of the scenarios under consideration."