BRUSSELS (Reuters) – The European Union can limit the impact of high energy prices through joint gas purchases, potential use of windfall profits and a possible price cap if Russia cut gas supplies, the European Commission said on Wednesday.
European energy prices hit record highs this year after the invasion of Ukraine by Russia, Europe’s top gas supplier. That followed months of already high gas prices, caused by surging demand in economies recovering from the COVID-19 pandemic.
The European Union executive has presented its “REPowerEU” plan to end the bloc’s dependence on Russian fossil fuels and accelerate use of renewable energy, but has also set out short-term options designed to limit harm to consumers.
The Commission said energy prices were likely to remain high for the next three years, particularly so for the rest of 2022.
A number of the European Union’s 27 members have taken steps to reduce energy bills and the Commission said it would allow certain measures through next winter, when energy demand surges.
These include regulations to limit prices for end-consumers, possible liquidity support for traders and energy companies and joint EU gas buying, designed to ensure competitive prices.
For electricity, EU members could use windfall profits of power generators to support consumers, extend regulated retail prices for smaller companies and introduce fuel subsidies in regions with limited interconnections.
If Russia cuts gas supply to the EU, the Commission would seek to coordinate a reduction of demand, including less affected members lowering their gas demand for the benefit of more affected EU countries.
It might also introduce an “administrative cap” on the gas price, limited to the duration of the emergency, a move that would require new legislation.
The Commission said it will seek endorsement of its proposals by EU governments, call on them to accelerate their preparations in case of reduced Russian gas supply and will look into adjusting the electricity market.
(Reporting by Philip Blenkinsop; Editing by Alexander Smith)