European Union to cap profits of energy companies benefitting from soaring prices

AP Photo/Jean-Francois Badias

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European Union energy ministers who met on Friday to find a way to soften the blow to citizens as energy prices continue to skyrocket, and to prevent power suppliers from folding, have agreed to put a cap on the revenues of non-gas power producers.

The ministers backed off from capping Russian gas prices, as was initially proposed, following threats from Moscow to completely cut off the transport of gas to Europe should such a move proceed, Reuters reported.

The EU's windfall plan, yet to be fleshed out, would see governments skim off excess revenues from non-gas energy producers that can currently sell their power at soaring prices determined by the price of gas, and use the money to curb consumer bills.

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A proposal to cap Russian gas prices did not win broad support among EU countries, the meeting summary showed.

EU diplomats said governments had broadly supported an EU proposal to offer emergency liquidity to power firms facing soaring collateral requirements, and tasked Brussels with designing such measures.

According to the meeting summary, gas providers would have to pay a “solidarity contribution.”

“The measures the Commission has recommended, in taking some of those excess profits and recycling them back into the households, makes sense,” Irish Environment Minister Eamon Ryan stated.

The Commission is expected to publish the full details of proposals it has in store, with energy ministers reconvening later this month to negotiate and approval final plans, according to diplomats who spoke to Reuters.