BRUSSELS – The European Union could limit the impact of higher energy prices through joint gas purchases, potential use of windfall gains and potential price caps if Russia cuts gas supplies, the European Commission said on Wednesday.
European fuel prices have reached record highs this year after Russia’s invasion of Ukraine, Russia’s top gas supplier. The recovery from the Covid-19 epidemic is already months after high gas prices due to growing demand in the economy.
The European Union executive presented its “REPowerEU” plan to end the bloc’s dependence on Russian fossil fuels and accelerate the use of renewable energy, but also set short-term options designed to limit consumer losses.
The commission said energy prices would remain high for the next three years, especially for the rest of 2022.
A number of 27 members of the European Union have taken steps to reduce energy bills, and the commission has said it will allow some action next winter if energy demand increases.
These include price-limiting regulations for end-consumers, potential liquidity support for traders and energy companies, and joint EU gas purchases designed to ensure competitive pricing.
For electricity, EU members could use the windfall gains of power generators to support consumers, expand controlled retail prices for small companies and introduce fuel subsidies in regions with limited interconnection.
If Russia cuts off gas supplies to the EU, the commission will seek to reduce demand, including by reducing its gas demand for the benefit of less-affected EU member states.
It could introduce an “administrative cap” on gas prices, limited to the emergency period, a move that would require new legislation.
The commission said it would seek approval from EU governments for its proposals, urging them to speed up their preparations for a reduction in Russian gas supplies and to focus on regulating the electricity market. (Reporting by Philip Blancinsop; Editing by Alexander Smith)