The complications that can ruin the European plan to intervene in the electricity market

Brussels proposes limits on the price of electricity generated without gas, taxes on electricity companies, reduction of consumption and liquidity to keep the electricity market oiled. The four points generate doubts The function does not end until the fat lady sings, it used to be said in times in the opera. The saga of the European intervention in the electricity market is on the way to being a long function with an unpredictable result because just three days after the plan was officially presented, criticism begins to rain down on it. The European Commission set up a framework with four pillars: Limit to 180 euros the megawatt of electricity generated in plants that do not use gas: renewable, nuclear, biomass, hydroelectric. From there, 117,000 million euros would be obtained in a year to alleviate the bill of vulnerable households and companies. 2. Impose a “contribution” (do not call it a tax) on companies that use fossil fuels (those that will not be limited to 180 euros what they are paid per megawatt). That tax (let’s call things by their name) will be 33% of the benefits greater than an additional 20% to those of the 2018-2021 period. 3. Reduce electricity consumption, between now and the end of March, by 10% in general and by 5% in peak hours, those with the highest consumption, when it is necessary to pull from the gas plants to cover the electricity demand. 4. Provide liquidity –through loans- to electricity market operators to avoid bankruptcies that put the system at risk. The plan’s ink had not completely dried when the first voices were raised. All points are in doubt, confirm diplomatic sources in Brussels. The energy-intensive industry, represented in Brussels through lobbies, considers that the measures are timid and that they will not drastically reduce the price of energy. They ask for more effective and urgent measures. The first, to limit to 180 euros what is paid per megawatt of electricity in plants that do not use gas, is openly rejected by the Dutch Government alleging that the legislation that regulates its liberalized electricity market prohibits it. . The countries that hardly generate electricity on their own and that depend on imports (Luxembourg, Lithuania) allege that the money that will be extracted by applying this limit will not reach them. The tax or contribution was not received unanimously either. Poland does not like it, so the Commission decided that the plan would be approved by a reinforced majority and not unanimously to avoid vetoes. Also not to run the risk that Hungary -or Poland itself- would block him to pressure on other issues. Poland argues that fiscal policy is decided unanimously and that what the European Commission calls “contribution” is actually a tax that should be approved unanimously. The reduction of electricity consumption is also a matter of controversy. Brussels proposes that this reduction be mandatory, but does not indicate how it should be done and gives freedom to each country to take the measures it deems appropriate. A Scandinavian diplomat says that some countries consider that this reduction should be voluntary and that the Commission leaves the capitals with little room for manoeuvre. The part that includes feeding the markets with liquidity seems to be separated from the plan because it is already on the agenda of the meeting at the beginning of October of the Ministers of Economy and Finance, who are keeping it and will not let the Energy Ministers be responsible. There are also criticisms about the omissions. The plan finally does not include a cap on what is paid for imported gas, not even for Russian. But many governments criticize that omission. Some, like the Polish or the Italian, continue to insist on that cap and not only for Russian gas but for all imported gas. Others, like Austria, do not even want to hear about it. Nearly 50% of the gas it uses still comes from Russia, and Putin has threatened to cut off the last supplies if such a cap were approved.