EU plans revenue clawback from non-gas power plants, document shows (updated)

VERBUND AG

07/09/2022 13:53

(Adds share price reaction, changes story identifier)
    By Kate Abnett
    BRUSSELS, Sept 7 (Reuters) - The European Commission wants
to claw back revenue from electricity generators that do not run
on gas, aiming to use the cash to cushion consumers from soaring
bills as they head into winter, a draft document seen by Reuters
said.
    The plan is part of emergency measures being drafted by
Brussels to reduce gas and electricity costs that have surged as
a result of Russia cutting gas flows to Europe since the
invasion of Ukraine.  urn:newsml:reuters.com:*:nL1N30E0RV   
     A draft of the Commission proposals seen by Reuters also
outlined a target for countries to cut electricity use by 10%.
    The document, which could change before it is formally
proposed, said the EU would apply a revenue cap of 200 euros per
megawatt hour on producers whose power generation is not
gas-fuelled.     
    European utilities stocks rallied on the news, with analysts
viewing a 200 euro cap as a better than expected outcome for an
industry that could provide relief to customers without
discouraging investment.  urn:newsml:reuters.com:*:nL8N30E249 urn:newsml:reuters.com:*:nL8N30E2OW
    Shares in Verbund  VERB.VI , RWE  RWEG.DE , Engie  ENGIE.PA 
and EDP Renovaveis  EDPR.LS  rose by between 4% and 13%, the
strongest day for the sector index  .SX6P  since early July.    
    Wind and solar farms, biomass plants, nuclear power plants
and coal generators would be among those affected. 
    The price cap would be applied and the excess revenues
recovered after power transactions are settled, so the measure
would not directly affect prices in Europe's exchange-traded
electricity market, the document said.
    The proposed cap would be far below the current power price
in wholesale markets. 
    German Thursday (day-ahead) delivery baseload power
 TRDEBD1  was down 8.2% at 435 euros per megawatt hour (MWh) at
1230 GMT on Wednesday.
    European power prices are typically set by gas plants, but
the cap would aim to reduce the cost of electricity produced by
non-gas plants that have lower running costs because they are
not exposed to surging prices.
    The aim is to free up cash for governments seeking to shield
consumers and industry from surging energy bills. EU countries
have already spent 280 billion euros ($276.95 billion) in the
past year on such measures, think-tank Bruegel said.
    EU energy ministers meet on Friday to discuss the proposals.
 
    The draft also outlined a target for EU countries to reduce
electricity demand by 10% a month, compared with the average for
the same month over 2017-2021, and a further 5% cut during
periods of peak prices.
    EU Commission president Ursula von der Leyen said on
Wednesday the Commission would also propose a cap on the price
Europe pays Russia for gas. That measure was not included in the
draft document.  urn:newsml:reuters.com:*:nL8N30E2RZ


($1 = 1.0110 euros)

 (Reporting by Kate Abnett, Marine Strauss; additional reporting
by Danilo Masoni in Milan; Editing by Jane Merriman and David
Goodman
)
 ((Kate.Abnett@thomsonreuters.com;))