Final green light from the EU Council to cut electricity consumption and tax profits

Regarding electricity consumption, Member States will identify

of their peak hours between 1 December 2022 and 31 March 2023, during which they will reduce demand.

Countries will be free to choose the appropriate measures to reduce consumption for both goals during this period.

The cap on the revenues of electricity producers is motivated by the fact that they have made unexpectedly large financial gains in recent months, without their operating costs having increased.

This is due to the role of

as marginal sources of pricing that currently inflate the final price of electricity.

The level of the 'cap' is designed to preserve the profitability of operators and avoid hindering investments in renewable energy.

The new revenue will be used by governments to finance measures of their choice to support and protect final electricity customers. 

"EU member states today formally adopted a Council regulation on an emergency response to tackle high energy prices. The regulation introduces common measures to reduce electricity demand and to collect and redistribute excess energy revenues. energy sector to households and small and medium-sized enterprises ", reads a note from the

A qualified majority was required for approval.

They voted against Slovakia and Poland.

Member States have introduced some flexibilities to reflect their national circumstances and measures in place at national level.

These include the ability to set a higher revenue ceiling, use measures that further limit market revenue, differentiate between technologies, and apply limits on the market revenue of other players, including merchants.

In situations where a Member State's net import dependency is equal to or greater than 100%, the states will conclude an agreement by

to adequately share the surplus revenue with the exporting Member State.

Regarding the solidarity contribution for the fossil fuel sector, the Council Regulation establishes a temporary mandatory 'tax' on corporate profits calculated on taxable profits, determined by national tax rules in the fiscal year starting in 2022 and / or in 2023, which exceed a 20% increase in the average annual taxable profit since 2018. 

The solidarity contribution applies in addition to the normal taxes and duties applicable in the Member States.

Member States may maintain national measures equivalent to the solidarity contribution provided they are compatible with the objectives of the regulation and generate at least comparable revenues.

Member States will use the proceeds of the solidarity contribution to provide financial support to households and businesses and to mitigate the effects of high retail electricity prices.

States can temporarily set a price for the supply of electricity to small and medium-sized enterprises to further support them.

As an exception and on a temporary basis, they will be able to set a price for the supply of electricity that is lower than the cost.  

All these measures are of a temporary and extraordinary nature.

They will apply from 1 December 2022 to 31 December 2023. The targets for reducing energy consumption apply until 31 March 2023. The mandatory cap on market revenues applies until 30 June 2023. Specific exemptions have been introduced for Cyprus and Malta .

The regulation will now be published in the EU Official Journal and will enter into force the following day.