The European Commission said on Monday (5 June) it had decided not to prolong emergency measures introduced last year to shield consumers from soaring energy prices, adding those measures had helped to contribute to a calming of European electricity markets.

At the end of 2022, the 27-member European Union was in the midst of an acute energy crisis fuelled by rising gas prices caused by Russia’s invasion of Ukraine.

In reaction, EU countries started ploughing hundreds of billions of euros into tax cuts, handouts and subsidies to tackle the crisis. They also implemented limits on retail power prices to alleviate pressure on households and introduced extraordinary taxes on some electricity producers.

EU energy commissioner Kadri Simson said “these measures contributed to a calming of the energy markets,” adding that the market outlook “has greatly improved” in the meantime.

“The Commission confirms that it will not propose a prolongation of these crisis measures,” the EU executive said in a statement.

Among the measures adopted at EU level was a controversial cap on revenues made by power plants running on renewables, nuclear power, or lignite, which made windfall profits from surging electricity prices without being affected by sky-high gas prices at the time.

EU member states agreed the revenue cap in September last year, alongside a range of other emergency measures to tackle the energy crisis, including a mandatory target to reduce electricity consumption by 5% at peak hours and retail price setting rules.

Concerning gas, European Union countries agreed end March to extend for the next 12 months, until March 2024, a voluntary target to curb their gas demand by 15%.

The Commission added that electricity prices have now decreased to less than €80/MWh and gas prices have not only fallen but also stabilised, to the extent that the electricity price spikes observed throughout 2022 are considered “less probable to occur in the upcoming winter”.

“EU countries reported that they broadly respected the binding target of reducing electricity consumption by 5% at peak hours – an important step for easing price pressure.”

The EU executive said some aspects of the emergency measures have been included in its proposals for longer-term structural adjustments in the EU’s electricity market rules.

Those proposals aim to try to increase the use of fixed-price power contracts, shield consumers from price spikes and speed up the shift to renewable energy.

[Edited by Frédéric Simon]

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