The European Commission is poised to respond this week to the 27th mandate to intervene in the EU electricity market. The plan centers on three measures widely supported by energy ministers on Friday: limits on extraordinary profits earned by marginal technologies, including renewables and nuclear; a Solidarity Contribution targeting fossil fuel companies based on reductions in electricity use, which will factor in additional profits from fiscal 2022; and a mandatory savings target aimed at the hours of highest electricity demand.
President Ursula von der Leyen will unveil the new package this Wednesday during the State of the Union address, after approval by the College of Commissioners. The initial proposal also referenced a gas price cap linked to imports from Russia via pipelines, a concept that sparked debate among capitals and appears to have been revised in the latest draft. The draft liquidity mechanism remains under consideration, with the Community Executive continuing work in parallel. One widely supported idea from energy ministers last Friday is to ensure energy operators hold adequate collateral guarantees.
Contribution of oil companies
Brussels argues that not only electricity producers but fossil fuel companies worldwide should share the burden, given their windfall profits from the current market dynamics and record high prices. The proposal introduces a Solidarity Contribution described as temporary and exceptional in nature. It would require oil, gas, coal producers, and refineries to contribute based on extra profits earned in fiscal year 2022. Revenue would fund measures to relieve households and businesses facing high energy costs.
The Commission insists that a coordinated, temporary Solidarity Contribution should be applied within a common framework across the Union. The aim is to shield consumers from rising prices while preserving the internal market’s proper function and the necessary operating conditions. According to the document reviewed by EL PERIÓDICO, the measure would affect surplus profits in 2022 above the three-year average of taxable profits, calculated under each country’s rules. If the three-year average is negative, the contribution would be zero.
In Spain, the government has backed a legislative step that began this week in Congress, introducing a temporary 1.2 percent tax on major energy companies. Unlike a general pass-through tax, the Solidarity Contribution would tax taxable profits rather than total sales, and it would apply only to profits exceeding the last three years’ average. This places the burden on windfalls rather than on total revenue.
Reduce consumption
The finalized Brussels draft confirms two targets for lowering electricity demand. First, member states will be required to implement measures sufficiently ambitious to curb total consumption. Second, there will be a strong emphasis on saving during the busiest hours of the day, when demand is highest. Member states will select 3 to 4 peak hours, though exceptions may include periods when renewable generation is low and marginal plants must serve demand.
Commission officials have advocated market-based, economically efficient tools such as tenders or auctions for saving, curtailment, or selling unused electricity. The proposal grants member states discretion in defining timeframes and measures. While the latest draft does not fix specific savings targets, it signals a goal of meaningful reductions and suggests a broader aim of a roughly 10 percent overall efficiency in early drafts, with a mandatory 5 percent during peak hours. Analysts estimate that reducing consumption could lower gas use by about 1.2 bcm over four months, translating to roughly a 3.8 percent reduction in gas demand over that period.
Limit the benefits of renewable energy
The draft also reaffirms Brussels’ plan to cap extraordinary profits for electricity producers that rely on non-gas sources such as renewables or nuclear plants. The cap would limit the upside created by high gas prices, ensuring that price signals remain clear and investor confidence is not undermined. The final price level would be designed to cover most marginal producers across the EU without threatening existing plants or future investment. The non-numbered draft envisions this cap generating revenue to finance consumer relief measures, safeguard price signals, and support cross-border trade across European markets.