BRUSSELS: Coal-fired power plants could be subject to the European Union’s plan to cap incomes for energy producers to raise funds to reduce soaring energy bills, according to a draft document seen by Reuters .
The European Commission last week proposed a package of emergency measures to reduce energy prices, including levies on windfall profits from energy companies for governments to recycle to cushion businesses and citizens exorbitant energy bills this winter.
Diplomats from EU countries are negotiating the proposals and trying to hammer out deals that all will be ready to endorse at a meeting of EU energy ministers on September 30.
A draft of the countries’ latest negotiating document, seen by Reuters, would allow countries to subject coal-fired power plants to an EU-scheduled cap on power generator revenues.
“Member states may authorize the regulatory authority to maintain or set a specific cap on market revenue from the sale of electricity produced from coal,” says the draft, which could still change before the meeting of the September 30.
The Commission had proposed a cap of €180 (US$179.64) per megawatt-hour on revenues generated by electricity generators with the cheapest running costs – including wind, solar and nuclear plants – since these plants can achieve the largest profit margins thanks to soaring electricity prices.
Coal-fired power plants were left out because the Commission said their running costs were above €180/MWh, so the revenue cap could make them unprofitable.
But EU countries plan to circumvent this problem by capping the revenues of coal-fired power plants at a higher level if their operating costs are higher than 180 euros/MWh, according to the document drafted by the Czech Republic, which ensures the rotating presidency of the EU.
Countries could also impose a higher revenue cap on other factories with higher running costs, to ensure they can continue to operate and recoup a “reasonable profit margin”, he said. .
EU member states are also considering a proposed EU Windfall Profit Levy for fossil fuel companies.
Countries like Italy that already have a windfall tax on energy companies should be able to keep their national measures instead of applying the EU ones – as long as they generate revenues at least equal to those expected from the EU scheme, according to the draft document.