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Europe is preparing for a complete shutdown of Russian gas supplies. What are the proposed measures

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The Commission also presented a number of areas where the organization of the electricity market could be optimized to make it more suitable for the transition from fossil fuels and more resilient to price shocks, while being able to protect consumers and deliver affordable electricity.

Energy Commissioner Kadri Simson said: “The EU has created a functioning and interconnected energy market, which continues to provide us with a reliable energy supply even in today’s difficult situation. But exceptional times call for exceptional action, and today we present additional measures that Member States can take to combat rising prices. As Russia continues its unprovoked war in Ukraine, we must also prepare for the possibility of gas supply disruptions and their impact, planning solidarity measures and possible price interventions. At the same time, we are moving forward with our efforts to improve the electricity market to better protect consumers, reduce price volatility and further support the green transition. ”

Short-term intervention measures

The Commission invites Member States to continue to use its energy pricing toolkit, which contains measures to reduce energy bills paid by European consumers. In addition, Member States have a number of short – term measures that they can use both now and during the next heating season.

In the gas markets:

The possibility for Member States to temporarily extend price regulation for final consumers to a wide range of customers, including households and industry.

Temporary circuit – breaker systems and urgent liquidity measures to support the effective functioning of commodity markets, in full compliance with State aid provisions.

Using the EU Energy Platform to aggregate gas demand, ensure competitive gas prices through voluntary joint procurement, and reduce the EU’s dependence on fossil fuels in Russia.

Options for intervention in the electricity markets for Member States:

The possibility of reallocating exceptionally large infrared revenues (so-called exceptional profits) to support consumers is extended to the next heating season.

In addition, congestion revenues can be used to fund consumer support.

A temporary extension of retail pricing to include small and medium-sized businesses.

For regions with very limited interconnections, the possibility of introducing subsidies for fuel costs in the electricity generation sector, in order to reduce the price of electricity, provided that these subsidies are designed to be compatible with EU treaties, especially in the absence of restrictions on cross – border exports, sectoral legislation and State aid rules.

EU measures in the event of a complete disruption of gas supplies

In the event of a complete disruption of Russia’s gas supply, additional exceptional measures may be needed to manage the situation. The Commission invites Member States to update their contingency plans, taking into account the recommendations included in the Commission’s analysis of the EU’s preparedness level.

The Commission will facilitate the development of a coordinated plan to reduce demand at EU level, with voluntary preventive reduction measures already in place in the event of an emergency. In a spirit of solidarity, the less affected Member States could reduce their gas demand to the benefit of the worst affected Member States.

To accompany these measures, an administrative cap on EU gas prices may be needed in response to a complete supply disruption. If introduced, this capping should be limited to the duration of the EU-wide emergency and should not affect the EU’s ability to attract alternative sources of pipeline and LNG and reduce demand.

An organization of the electricity market adapted to the demands of the future

The conclusion of the recent ACER report is that the fundamentals of market organization bring considerable benefits to consumers. According to this report, there are also several ways to improve consumer protection and ensure affordable electricity supply, increase market robustness and resilience to future shocks, and further align it with the objectives of the market. The European Green Pact.

The Commission therefore sets out a number of issues that need to be considered in order to ensure the optimal functioning of the market in the future. These include market-based instruments designed to protect consumers against price volatility, as well as measures to increase demand response and promote self-consumption patterns, appropriate investment signals and more transparent market surveillance. Based on the analysis presented today, the Commission will launch an impact assessment process on possible adjustments to the organization of the electricity market.

Following the set of instruments on energy prices in October 2021, the Commission presented additional guidance to Member States on 8 March 2022 in order to protect businesses and households against high prices. These guidelines confirm the possibility of regulating prices for final consumers in exceptional circumstances and describe how Member States can redistribute to consumers revenues from high profits in the energy sector and from emissions trading. On 23 March, the Commission presented additional options to mitigate the impact of high energy prices and proposed minimum gas storage obligations and voluntary joint purchases of gas.

At the European Council meeting on 24-25 March 2022, EU leaders called on the Commission to put forward proposals to address the issue of excessive electricity prices, while maintaining the integrity of the single market, maintaining incentives for the green transition, and further ensuring security of gas supply. avoiding disproportionate budgetary costs. The Commission is committed to evaluating options for optimizing the organization of the EU electricity market and to presenting a detailed plan to end our dependence on fossil fuels in Russia.

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