Background information

The energy crisis that followed Russia's invasion of Ukraine in March 2022 was an exacerbation of a trend already noticeable since mid-2021 and therefore a rapid increase in energy prices caused by the economic rebound after the COVID-19 pandemic and reduced Russian gas supplies (energy blackmail). This has resulted in fundamental challenges to the energy security of the EU economy and households. An ad hoc redesign of the electricity market became necessary. Therefore, on 6 October 2022, the Council of the EU adopted, as a matter of urgency, temporary rules of an extraordinary nature allowing direct intervention by Member States in the energy market (Council Regulation (EU) 2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices).

Content of measure

This measures introduced electricity reduction targets. This includes a voluntary overall reduction target of 10% of gross electricity consumption and a mandatory reduction target of 5% of electricity consumption during peak hours. It also established a revenue cap for electricity producers generating below marginal cost whenever wholesale electricity prices exceed €180/MWh.

The new legislation allows Member States to collect funds from excess profits in the energy sector that exceed a 20% increase in average annual taxable profits from 2018. This is a solidarity levy that can be redistributed to the most vulnerable people and companies in the EU. Member States may maintain national measures equivalent to the solidarity levy provided that they are compatible with the objectives of the regulation and generate at least comparable revenues.

Under the Regulation, Member States may temporarily and exceptionally set the price for the supply of electricity to small and medium-sized enterprises below cost.

Use of measure

Not available.

Target groups

Workers	Businesses	Citizens
Applies to all workers	Applies to all businesses	Applies to all citizens

Actors and funding

Actors	Funding
EU (Council, EC, EP)	Companies National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	No involvement	No involvement
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• No involvement
• Main level of involvement: N/A

Involvement

The European social partners were not directly involved in the development of this measure. However, they did inform the EU institutions of the need for extraordinary measures to curb the rise in energy prices in order to provide security for EU companies and workers.

Views and reactions

The reactions of European social partners were supportive albeit with some caution.

BusinessEurope called for the decoupling of gas and electricity prices before of adoption of the Regulation noting that it could only be an exceptional and temporary measure, justified by exceptional circumstances in the energy market. Its good design, taking into account the impact on security of supply, could effectively reduce energy bills.

The European Trade Union Confederation (ETUC) has called for a structural reform of the electricity market that would prevent the influence of fossil fuels in setting the price of decarbonised electricity and ensure large-scale investment in additional generation capacity, as well as the "development of clean energy transmission, storage and distribution infrastructure." The ETUC also called for the creation of a mechanism to cap the price of gas in electricity generation, which would partly use the excess profits of energy companies.

Sources

• 06 October 2022: Council Regulation (EU) 2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices (eur-lex.europa.eu)
• 06 October 2022: Energy crisis: European business calls for new EU-wide measures (www.businesseurope.eu)
• 28 October 2022: ETUC position on EU proposals to mitigate the energy crisis (www.etuc.org)