February 1, 2023

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Eruption of energy prices: EU proposes measures for countries

Energy prices
The European Union proposes measures for countries

Rising energy costs are causing problems for private households and companies in EU member states. Some countries are calling for concerted action by the Federation of States, for example in the creation of gas reserves. Today, however, the EU Commission wants to provide a kind of toolbox for self-help.

What can EU countries do against rising energy prices? The European Commission is looking for answers today and wants to provide what is called a toolbox. The toolbox should have measures that EU countries can use nationally without distorting the market. Homes and companies are increasingly affected by the pressure of rising heating and electricity costs.

The total price of natural gas rose by about 440 percent from January to October. Gas is used for heating, but also to produce electricity – so fossil fuels have an impact on how much electricity costs.

In Germany, stock market electricity has risen 140 percent since January, 340 percent in Italy and 425 percent in Spain. This is also reflected in household electricity and heating bills – albeit dramatically less than wholesalers. This is because the consumer price is also determined by taxes, levies and network fees. According to the comparative portal Check24, electricity costs in Germany increased by 4 percent in September over the previous year. Consumers paid 33 percent more for heating.

Several member states intervened in a short notice to protect homes from high electricity and heating charges. France, for example, has promised a tariff break and wants to give 100 euros to poor households. Italy, for example, wants to spend 3 3 billion to write off some of its electricity and gas bills through tax cuts.

The “Toolbox” aims to collect and coordinate similar and similar activities. For some member states, this is not enough. French Finance Minister Bruno Le Myre said last week that energy prices would remain volatile during the transition. Countries such as Spain, France and Greece have called for long-term action at the European level. Among other things, states want to consolidate gas purchases, create joint gas reserves, and double the price of electricity and gas. Such medium-term activities can be listed in the “Toolbox”. As Commission Chairman Ursula van der Leyen said last week, firm talks on the issue should not take place until the EU summit on October 21 and 22.

The Commission is reluctant to take joint action because it considers the price increase to be temporary. According to the commission’s estimates, prices should fall again by April, but to a higher level than in 2020. Basically, the rise in prices is due to the unusually high demand after recovering from the corona epidemic. At the same time stocks have been depleted due to low supply and last winter.

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