BRUSSELS - European Commission President Ursula von der Leyen said the bloc could raise more than 140 billion euros (S$196 billion) to cushion the cost-of-living blow for consumers by capping revenues from low-cost power producers.
"In our social market economy, profits are good. But in these times, it is wrong to receive extraordinary record profits benefiting from war and on the back of consumers." Ms von der Leyen told the European Parliament on Wednesday.
A draft of the commission's proposals would skim off excess revenues from Europe’s non-gas fuelled power plants to raise cash for governments to spend on helping businesses and citizens with their bills.
Wind and solar farms and nuclear plants would face a cap of 180 euros per megawatt hour on the revenue they receive for generating electricity, with governments recouping any excess cash and recycling it to support consumers, according to the draft.
That would cap generators’ revenues at less than half of current market prices.
Fossil fuel firms would also face a windfall profit levy to claw back what the commission described in the draft as “unexpected profits” linked to soaring oil and gas prices stoked by Russia slashing gas deliveries in the wake of its invasion of Ukraine.
Oil, gas, coal and refining firms would be required to make a “solidarity contribution” of 33 per cent of their taxable surplus profits from fiscal year 2022, the draft said.
These are part of a series of radical steps Ms von der Leyen is setting out to stem the energy crisis. Her proposals fire the starting gun on what are likely to be fractious discussions between member states, which have different priorities and vulnerabilities.
The measures need to be signed off by member states. Ms von der Leyen has already had to park the idea of imposing a price cap on imported Russian gas amid opposition and divisions.
But gas prices are easing from their highs, partly on the back of the bloc's willingness to act.
Markets are also hoping for moves from European regulators to ease the strain on energy traders caused by ballooning collateral demands.
The commission is in talks with financial regulators, and the European Securities and Markets Authority said Tuesday it is "actively considering whether, besides such supervisory monitoring, any regulatory measures are necessary".
Several countries have already taken steps to backstop energy firms in an effort to stop the crisis from turning into a Lehman moment. Any centralised measures on liquidity are still being hashed out.
"We know that there are some strains around liquidity. We need to be able to address those with the regulators and to understand how it will work effectively," EU financial services commissioner Mairead McGuinness said in an interview over the weekend.
"We're looking at circuit breakers as well, but again, the details are for further evolution," she said. BLOOMBERG, REUTERS