EU sets out plans for windfall taxes and power savings amid energy crisis

theguardian.com:

The head of the EU executive, has set out plans for windfall taxes, mandatory electricity savings and a cap on the price of Russian gas to limit Kremlin revenues used to finance the “atrocious” war in Ukraine.

Ursula von der Leyen outlined a five-point plan in response to an energy price crisis, driven by the Russian shutdown of the key Nord Stream 1 pipeline but exacerbated by the climate crisis and lingering effects of the Covid pandemic.

Low-carbon energy companies, renewable and nuclear suppliers that have reaped “enormous revenues … they never dreamed of” from generating electricity will face a windfall tax, Von der Leyen said, with proceeds earmarked to help domestic consumers and companies pay “astronomical” bills.

Under EU energy rules, the price of electricity is determined by the cost of the most expensive fuel, usually gas, rather than cheaper renewables and nuclear power. As a result of all-time-high gas prices, low-carbon electricity generators have been rewarded with a big increase in income.

“These revenues do not reflect their production costs,” Von der Leyen said. “So it is now time for the consumers to benefit from the low costs of low-carbon sources.” The commission, she said, proposed “to re-channel these unexpected profits” to allow member states to support vulnerable households and companies.

Oil and gas companies that have made “massive profits” would also be subject to a windfall tax, which Von der Leyen called a “solidarity contribution”.

While she did not mention specific numbers, a leaked document seen by the Guardian shows the commission wants a €200 (£173) per megawatt hour limit to the price of electricity generated by low-carbon technologies. The paper states this “mimics the market outcomes