Proposal for a COUNCIL REGULATION on an emergency intervention to address high energy prices
Date: 2022-09-14
Institutions: Directorate-General for Energy, European Commission
Subjects: EU energy policy, consumer protection, crisis management, electrical energy, energy consumption, energy crisis, energy efficiency, energy saving, natural gas, price of energy, security of supply

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   EUROPEAN COMMISSION  Brussels, 14.9.2022  COM(2022) 473 final 2022/0289 (NLE)  Proposal for a COUNCIL REGULATION on an emergency intervention to address high energy prices  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

Gas and electricity prices have reached record levels in 2022 and hit all-time highs following 

the Russian invasion of Ukraine. Over the past year, electricity prices in Europe have rapidly 

risen to a level much higher than in recent decades. This dynamic is intrinsically linked to the 

high  price  of  gas,  which  increases  the  price  of  electricity  produced  from  gas  fired  power 

plants,  which  are  often  needed  to  satisfy  demand.  Prices  started  rising  rapidly  last  summer 

when  the  world  economy  picked  up  after  COVID-19  restrictions  were  eased.  Subsequently, 

Russia’s invasion of Ukraine has exacerbated this situation.  

Energy prices are expected to remain high due to uncertainty in the market following a series 

of gas supply disruptions that can only be explained by a deliberate attempt by Russia to use 

energy  as  a  political  weapon.  Further  disruptions  of  Russian  gas  supplies  to  the  EU  in  the 

forthcoming  weeks  or  months  may  result  in  even  higher  levels  of  gas  prices  with  knock-on 

effects for the price of electricity, the level of inflation and its impact on citizens as well as the 

overall financial and macroeconomic stability of the EU. 

The  Commission  is  acutely  aware  of  the  impact  that  the  uncertainty  around  gas  supply  is 

having on the electricity market.  Member States  across Europe have experienced  a surge in 

electricity  prices  linked  to  rising  gas  prices,  leading  to  gas  becoming  the  marginal  price 

setting fuel ahead of coal. At the same time, the availability of electricity generation in the EU 

has been below usual levels in the last months due to increased maintenance works of power 

stations, lower output from hydropower generation, and closures of some older power plants.   

In  parallel,  record-breaking  temperatures  this  summer  have  pushed  up  energy  demand  for 

cooling  and  have  added  pressure  on  electricity  generation.  The  extreme  weather  conditions 

have  thus  contributed  to  energy  scarcity  and  high  energy  prices,  constituting  a  burden  for 

consumers and industry and dampening the economic recovery. Additional supply pressures 

on energy  and  food commodity prices are feeding  global inflationary pressures, eroding the 

purchasing power of households and the economy as a whole.  

The  dramatic  increase  in  electricity  prices  that  we  are  observing  is  putting  pressure  on 

households,  small  and  medium  enterprises  and  industry  and  risks  causing  wider  social  and 

economic harm. Vulnerable customers and the energy poor are hardest hit as was already the 

case last winter, but the high prices are also increasingly affecting middle-income households 

and businesses. They  risk not  being  able to pay  their energy bills  and are facing the choice 

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between  paying  for  energy  and  other  essential  goods  or,  for  businesses,  their  very  financial 

viability and investment plans are in question.  

This  economic  context  requires  a  rapid  and  coordinated  EU-wide  response  to  mitigate  the 

difficulties  that  high  prices  are  causing  for  consumers  and,  not  only  energy  poor  and 

vulnerable, but  also  middle-income households and businesses. Electricity  retail  prices  have 

increased  on  average  by  almost  half  year-on-year  from  July  2021  and  the  extraordinary 

increases are expected to continue ahead of the next heating season gradually trickling down 

to most consumer contracts. The EU response needs to be coordinated in a careful and holistic 

way. Electricity must continue to flow efficiently around Europe so that Member States can 

export surplus electricity to those who need it most. The role of the internal energy market in 

helping  mitigate  the  impact  of  the  current  energy  crisis  cannot  be  overlooked.  ACER’s 

assessment  of  the  EU  Wholesale  Electricity  Market  Design1  showed  that  cross-border  trade 

delivered EUR 34 billion of benefits to  consumers in 2021 while helping to smoothen price 

volatility, and that it enhances each Member State’s security of supply and resilience to price 

shocks. 

The Union is thus faced with an extraordinary situation. The current unprecedented challenges 

call for putting in place appropriate, proportionate and temporary measures, to be taken in a 

spirit of solidarity, in order to address the severe difficulties arising in the area of energy and 

overcome the energy crisis by acting together. 

The Commission therefore proposes an integrated and interdependent package of measures to 

be  introduced  immediately.  These  measures  seek,  inter  alia,  to  mitigate  the  impact  of  high 

electricity prices and protect consumers, while preserving the benefits of the internal market 

and  a  level-playing  filed.  The  measures  deliver  on  these  objectives  by  addressing  different 

aspects  of  the  current  situation,  thus  complementing  and  reinforcing  their  effects,  and 

allowing  for  a  single  and  coordinated  EU  response  to  the  crisis.  At  the  same  time  they  are 

fully  compatible  with  the  communication  of  8  March  2022,  entitled  ‘REPowerEU:  Joint 

European Action for more affordable, secure and sustainable energy’, and the Commission’s 

REPowerEU  plan  of  18  May  2022  with  the  aim  to  end  the  Union's  dependence  on  Russian 

fossil fuels as soon as possible, and at the latest by 2027.  

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  https://acer.europa.eu/Official_documents/Acts_of_the_Agency/Publication/ACER's%2520Final%2520
Assessment%2520of%2520the%2520EU%2520Wholesale%2520Electricity%2520Market%2520Design.
pdf 

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The  very  high  energy  prices  currently  faced  by  consumers  generate  exceedingly  large 

financial  gains  not  only  for  electricity  generators  with  lower  marginal  costs,  but  also  for 

companies  in  the  oil,  gas,  coal  and  refinery  sectors.  These  gains  are  primarily  due  to 

favourable  external  market  factors  caused  by  the  Russian  war  and  not  by  companies’  own 

additional efforts or investments. These high energy prices create hardship for EU households 

and  businesses,  drive  up  inflation  and  necessary  support  measures  raise  public  expenditure. 

Therefore,  it  is  opportune  to  lower  electricity  demand  across  the  EU  to  reduce  the  need  for 

gas-fired  electricity  production  and  also  redistribute  some  of  the  revenues  garnered  by 

companies  in  the  different  energy  sectors,  as  a  result  of  these  exceptional  circumstances,  to 

alleviate difficulties for energy consumers and society in general. Such redistribution can be 

achieved  by  different  instruments,  depending  on  the  circumstances  of  the  sector,  with  the 

purpose of making these funds available to consumers or projects to strengthen the Union’s 

energy  autonomy  including  the  possibility  for  Member  States  to  channel  parts  of  the 

contribution to Union funds in the spirit of solidarity or use them on the basis of agreements 

between Member States. 

Several  Member  States  have  already  adopted  or  are  currently  considering  the  adoption  of 

redistribution  measures.  However,  measures  adopted  solely  at  national  level  risk  creating 

uneven conditions for companies operating in the EU energy market. In order to create a level 

playing  field,  the  Commission  proposes  two  complementary  instruments  so  as  to  cover  the 

full  energy  sector:  (a)  a  measure  that  temporarily  targets  and  reduces  the  revenues  of 

electricity producers and (b) a measure that temporarily establishes  a solidarity  contribution 

on surplus profits in the fossil sector falling within the scope of this Regulation. By reducing 

the revenues of electricity producers, the measure proposed in the Regulation aims to mimic 

the  market  outcome  that  producers  could  have  expected  if  global  supply  chains  would 

function normally, in the absence of the gas supply disruptions that have taken place since the 

invasion  of  Ukraine  in  February  2022.  Furthermore,  the  Commission  proposes  a  temporary 

solidarity  contribution  applying  to  the  profits  of  businesses  active  in  the  oil,  gas,  coal  and 

refinery sectors, which has significantly increased compared to prior years. 

The Member States will use  proceeds from  the solidarity  contribution  to  provide support to 

households and companies and to mitigate the effects of high energy prices. They should also 

use the proceeds from this short-term measure to finance measures for the reduction of energy 

consumption  and  support  industries,  thereby  further  strengthening  the  Union’s  energy 

autonomy in the longer term. 

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These  temporary  measures,  which  redistribute  surplus  revenues  and  profits  to  support 

consumers,  deliver  the  benefit  of  lower  cost  energy  generation  to  consumers.  As  such,  they 

are without prejudice and complementary to the ongoing work of the European Commission 

concerning  the  liquidity  in  financial  markets  for  energy,  the  EU  State  aid  Temporary  Crisis 

Framework, the gas price reduction as well as the long-term market design as announced in 

the  Communication  on  Short-Term  Energy  Market 

Interventions  and  Long-Term 

Improvements  to  the  Electricity  Market  Design  that  was  issued  alongside  the  Repower  EU 

Plan  of  18  May  2022.  The  proposed  Regulation  preserves  the  benefits  of  the  internal 

electricity  market  in  terms  of  dispatch  efficiency  and  security  of  supply  while,  at  the  same 

time, lowering electricity demand and the impact of high gas prices on consumers’ electricity 

bills. 

2. 

ELECTRICITY EMERGENCY TOOL 

Reduction in demand for electricity 

In  response  to  the  heightened  risk  for  the  coming  winter  and  the  need  to  lower  overall 

electricity demand, to preserve fuel stocks for electricity generation and take targeted action 

to reduce electricity prices in the most expensive hours, in a spirit of solidarity, the proposed 

Regulation sets out two electricity demand reduction targets.  

The  first  requires  Member  States  to  put  measures  in  place  to  lower  overall  electricity 

consumption  from  all  consumers,  including  those  who  are  not  yet  equipped  with  smart 

metering systems  or devices enabling them to  adjust their consumption during the day. The 

measures should be sufficiently ambitious and could include, for example, targeted consumer 

information  and  communication  campaigns.  In  this  respect,  a  Union-wide  application  for 

targeted information towards consumers could be envisaged. In addition, to specifically target 

the  most  expensive  hours  of  electricity  consumption  when  gas  generally  sets  the  marginal 

price,  the  Commission  proposes  a  mandatory  target  of  at  least  a  5%  reduction  in  gross 

electricity consumption during selected peak price hours covering at least 10% of the hours of 

each month where prices are expected to be the highest. This mandatory target would result in 

selecting  on  average  3  to  4  hours  per  weekday,  which  would  normally  correspond  to  peak 

load  hours,  but  can  also  include  hours  where  electricity  generation  from  renewables  is 

expected to be low and the generation from marginal plants is necessary to cover the demand. 

To account for this, Member States have a certain margin of discretion when identifying these 

hours. The binding target specifically addresses consumers who can deliver flexibility through 

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demand reduction or demand shifting offers on an hourly basis. Member States should be free 

to  choose  the  appropriate  measures  to  achieve  the  demand  reduction  targets  and  should,  in 

particular,  consider  economically  efficient  and  market-based  measures  such  as  auctions  or 

tender  schemes  for  demand  side  response  or  electricity  not  consumed.  This  may  include 

expanding existing schemes or national incentives to develop demand response. This may also 

include financial incentives or compensation to participating market parties in cases when this 

is paid for additional electricity not consumed compared to the expected normal consumption 

in the hour without the tender. The introduction and implementation of such measures should 

be without prejudice to the application of State aid rules. 

Based on observed hourly generation during the period between January and August 2022, a 

reduction of 5% during the 10% hours displaying the highest level of demand for electricity 

would bring the average demand during these hours to the level of the first non-selected peak 

hours.  This  would  therefore  result  in  a  smoothening  of  the  hourly  consumption  profile. 

Moreover,  since  gas  is  generally  the  marginal  technology  during  the  hours  with  the  highest 

demand,  this  targeted  5%  reduction  can  lead  to  a  reduction  of  gas  consumption  estimated 

around 1.2bcm over a 4-month period. This represents around 3.8 % of gas consumption for 

power  over  the  same  period.  Recent  studies2  show  that  the  current  potential  of  demand 

response could fulfil the mandatory target, having a positive impact on electricity prices and 

on volumes of gas savings. 

Cap  on  market  revenues  for  the  generation  of  electricity  from  inframarginal 

technologies 

Secondly,  the  proposed  Regulation  sets  out  an  approach  to  recover  excess  revenues  from 

generators with lower marginal costs such as renewables, nuclear, and lignite (“inframarginal 

technologies”) by setting an ex-post cap on revenues per MWh of electricity produced. 

In the day-ahead market, electricity prices are determined by the variable cost of the marginal 

technology,  i.e.  the  last  and  most  expensive  plant  that  is  needed  to  meet  demand  (marginal 

pricing).  In  view  of  the  role  that  the  electricity  prices  in  the  day-ahead  market  have  as  a 

reference  for  the  pricing  of  electricity  across  all  the  other  market  timeframes,  this  measure 

reduces  the  impact  that  the  margin-setting  technology  (typically  coal,  today  often  gas-fired 

power plants) has on the revenues of other generators with lower marginal costs such as most 

2 

Study on the quantification of Demand Response (DR) benefits to electricity suppliers and consumers 
in  Europe  in  2030  on  its  way  to  achieve  deep  decarbonisation,  Compass  Lexecon,  January  2021; 
Demand Side Flexibility potential contribution to 2023 gas reduction, DNV, September 2022 

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renewables,  nuclear,  and  lignite.  It  mimics  the  market  outcomes  for  these  technologies  that 

could  be  expected  were  global  supply  chains  functioning  normally  and  not  subject  to  the 

weaponisation of energy through gas supply disruptions. 

Through  this  Union-wide  approach,  based  on  the  principle  of  solidarity,  the  electricity 

wholesale  markets  would  function  and  clear  as  they  do  today,  thereby  ensuring  that  the 

cheapest and most efficient power plants around the EU are dispatched always first, and that 

Member  States  can  rely  on  imports  when  needed.  This  preserves  the  incentive  for 

technologies such as coal and gas-fired power plants, storage facilities and demand response 

to  be  available  to  run  when  needed,  ensuring  the  stable  operation  of  the  electricity  system 

throughout the winter season 2022-23.  

The level of the cap on market revenues 

The revenue cap prescribed in this Regulation should be set  at a level that encompasses the 

majority  of  inframarginal  generators  in  the  EU  and  avoids  jeopardising  the  availability  and 

profitability  of  existing  plants  and  future  investment  decisions  for  new  inframarginal 

generation.  

While  occasional  and  short-term  peaks  on  prices  can  be  considered  a  normal  feature  in  an 

electricity  market  and  may  be  useful  for  some  investors  to  recover  their  generation 

investment, the extreme and lasting price increase since February 2022 is markedly different 

from a normal market situation of occasional peak prices or longer-term price swings linked 

to economic cycles.  

This  applies  in  particular  to  investment  decisions  for  generation  from  renewable  sources, 

which are crucial to  achieve the  Union’s  decarbonisation targets.  To  avoid  undermining the 

assessment  of  profitability  when  investment  decisions  were  made,  the  cap  should  therefore 

not be set below the expectations of market participants as to the average level of electricity 

prices  in  the  hours  during  which  the  demand  for  electricity  was  at  its  highest,  before  the 

invasion  of  Ukraine  by  Russia.  The  average  market  price  expectations  for  peak  hours  were 

consistently  and  significantly  below  180  EUR/MWh  during  the  past  decades,  despite  price 

differences across regions in the Union. Moreover, simulations based on observed prices over 

January through August 2022 show that a cap set at 180 EUR/MWh would have resulted in 

stabilising  the  average  revenue  around  150  EUR/MWh.  This  average  revenue  level  is 

consistently  higher  than  the  current  levelised  cost  of  energy  (LCOE)  for  the  inframarginal 

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technologies targeted by the application of the cap on revenues3, allowing producers to which 

it applies to cover their investments and operating costs. The cap should therefore not impair 

the  investment  in  new  inframarginal  capacities.  Therefore,  the  Commission  proposes  to  set 

the revenue cap at 180 EUR/MWh, which incorporates the necessary security margin.  

Such  a  cap  should  be  limited  to  market  revenues  rather  than  encompassing  total  generation 

revenues  (including  for  instance  those  stemming  from  support  schemes),  to  avoid 

significantly impacting the initial expected profitability of a project.  

Having a uniform cap on revenues across the Union is necessary to preserve the functioning 

of  the  internal  electricity  market  as  it  would  maintain  price-based  competition  between 

electricity producers based on different technologies, in particular for renewables. As the cap 

will  apply  on  the  revenues  per  MWh  of  electricity  produced,  price  formation  in  electricity 

wholesale  markets  will  not  be  affected.  The  dispatch  of  power  plants  will  continue  to  take 

place based on their level of efficiency, with those with lower marginal costs being dispatched 

first, and the cross-border trade of electricity will not be affected.  

Member  States  will  need  to  put  appropriate  procedures  in  place  to  recover  the  surplus 

revenues from generators, as the revenue cap may be applied at the moment when transactions 

are  settled  or,  if  not  possible,  thereafter.  This  depends  on  differences  in  the  way  wholesale 

electricity  markets  function  in  different  timeframes  and  how  they  are  organised  in  Member 

States. 

Scope of the cap 

The  market  revenue  cap  would  apply  to  revenues  from  the  sale  of  electricity  for  all 

inframarginal  generators  as  defined  in  the  Regulation  and  cover  all  market  timeframes, 

regardless of whether the trading of electricity takes place bilaterally (over-the-counter) or in 

centralised  marketplaces.  If  the  cap  was  to  apply  only  to  certain  timeframes  or  only  to 

exchanges  and  other  organised  marketplaces,  inframarginal  generators  could  have  an 

incentive to trade electricity in the timeframes and marketplaces not covered by the measure. 

On  the  other  hand,  the  proposed  wide  application  of  the  revenue  cap  would  preserve 

incentives  to  conclude  long-term  power  purchase  agreements,  which  are  crucial  for 

consumers  to  hedge  against  price  volatility  and  important  tool  to  stimulate  investments  in 

inframarginal  technologies,  especially  renewables.  Given  that  the  revenue  cap  does  not 

interfere  with  the  formation  of  prices,  consumers  would  have  an  interest  to  conclude  long-

3 

Energy costs, taxes and the impact of government interventions on investments: final report, Trinomics, 
October 2020. 

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term power purchase agreements which allow them to benefit directly from prices lower than 

those observed in the market.  

The  cap  on  revenues  will  apply  per  MWh  of  electricity  produced.  Regardless  of  the 

contractual  form  in  which  the  trade  of  electricity  may  take  place,  the  cap  should  apply  to 

realised  market  revenues  only.  This  is  necessary  to  avoid  targeting  producers  who  do  not 

actually benefit from  the current  high electricity  prices due to  having hedged their revenues 

against fluctuations in the wholesale electricity market at a price below the cap level. Hence, 

to the extent that existing or future contractual obligations, such as renewable power purchase 

agreements and other types of power purchase agreements or forward hedges, lead to market 

revenues  from  the  production  of  electricity  below  the  cap,  they  would  not  be  caught  by  its 

application.  

Definition of relevant inframarginal technologies 

The revenue cap is applicable to market revenues from the sale of electricity produced from 

technologies  whose  marginal  costs  are  lower  than  the  cap,  such  as  wind,  solar,  geothermal, 

nuclear  energy,  biomass,  oil  and  oil-related  products,  hydropower  installations  without 

reservoir, etc. 

The  cap  on  market  revenues  should  however  not  apply  to  the  technologies  with  input  fuel 

costs leading to break-even level above the cap level, as this would jeopardise these activities 

and,  ultimately,  security  of  supply.  This  is  for  instance  the  case  of  gas-fired  and  coal-fired 

power  plants.  Since  the  invasion  of  Ukraine,  the  prices  of  natural  gas  and  hard  coal  have 

increased sharply4, leading to break-even generation price above the cap level. If gas-fired and 

coal-fired power plants were subject to the revenue cap, they would not be able to cover their 

operating costs and would be pushed out of activity.  

In  line  with  the  objectives  of  the  REPowerEU  Communication,  the  application  of  the  cap 

should not hamper incentives in investments in flexible generation technologies (e.g. demand-

response and all types of storages), and the production of electricity from sources that directly 

compete with natural gas and gas-fired power plants. Accordingly, the cap should not apply to 

power plants using biomethane. 

This  is  necessary  in  order  to  preserve  the  incentives  for  these  technologies  and  generation 

types to decrease gas consumption, as highlighted in RePowerEU Communication.  

4 

Natural gas price increased above 200 eur/MWh, and coal prise above 300 eur/MWh. 

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In  order  to  preserve  the  incentives  for  the  development  of  innovative  technologies,  the 

revenue cap should not apply to demonstration projects. In practice, this is already usually the 

case,  as  the  remuneration  of  demonstration  projects  is  typically  set  out  of  the  market  (e.g., 

fixed revenues through feed-in-tariffs). 

In some Member States, the revenues obtained by some generators are already capped by way 

of State measures. As such these generators do not benefit from increased revenues resulting 

from the recent spike of electricity prices. Therefore, existing producers subject to this type of 

State measures should be excluded from the application of the cap. 

With  a  view  to  avoiding  an  excessive  administrative  burden  and  ensuring  an  efficient 

application of the proposed measure, Member States should be allowed to exclude producers 

generating  electricity  from  installation  facilities  with  a  capacity  below  20  kW  from  the 

application of the cap on revenues. 

Redistribution to final customers 

The  surplus  revenues  resulting  from  the  application  of  the  cap  shall  be  channelled  to  final 

electricity customers. This includes all purchasers of electricity for their own consumption. In 

selecting  the  beneficiaries  of  the  redistribution,  Member  States  should  target  as  much  as 

possible the final customers, be it private or commercial ones, who are most strongly exposed 

to high electricity prices. The distribution the surplus revenues as set out in this instrument is 

without prejudice to the application of Article 107 and Article 108 TFEU.  

Addressing difficulties faced by consumers 

Finally,  this  proposal  contains  key  provisions  to  address  the  difficulties  being  faced  by 

consumers as a result of very high energy prices. The current crisis represents the challenge of 

ensuring adequate support so that household consumers continue to have access to necessary 

energy, while not  undermining the incentive to  save energy.  The starting point for action is 

full  recognition  of  the  hardship  risk  that  households  are  facing,  including  middle  income 

households and need for support measures at national level.  

A  wide  range  of  support  measures  have  already  been  put  in  place  by  Member  States, 

including  measures  based  on  the  Toolbox.  These  have  included  direct  income  support, 

reductions in taxes, and levies and rebates on consumers energy bills, as well as measures to 

support  energy  efficiency  and  on-site  renewable  production.  Member  States  have  also 

intervened in price setting in the supply of electricity – that is establishing regulated prices for 

end-consumers.  

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All of these tools will remain important. Member States should be able to choose those which 

best suit their national circumstances. As far as possible, support to consumers will also need 

to support demand reduction. However, it is also important to recognise that some consumers 

may already be close to the minimum essential level of consumption necessary to safeguard 

their well-being.    

The Commission provided Guidance on the application of State intervention into price setting 

in  the Communication REPowerEU: Joint European Action for more affordable, secure  and 

sustainable  energy5  in  the  design  of  public  interventions  in  price  setting  for  the  supply  of 

electricity, ensuring they benefit consumers during this current crisis and enhance competition 

to  the benefit  of  consumers over the longer term. However, under Directive (EU) 2019/944 

such interventions in price setting may not cover small and medium enterprises and must not 

be below cost.  

Consumers’ right to choose the energy supplier who offers them the best price and service lies 

at  the  heart  of  the  internal  electricity  market.  The  resulting  competition  has  put  downward 

pressure  on  prices  and  increased  choice,  as  consumers  no  longer  had  to  rely  on  incumbent 

monopolists.  Competition  and  choice  of  suppliers  and  offers  will  also  be  a  key  part  of 

realising  the  European  Green  Deal,  as  they  allow  consumers  to  benefit  from  the  internal 

market  for  electricity  and  to  contribute  to  attaining  the  Union's  energy  efficiency  and 

renewable energy targets.  

As  set  out  in  the  Communication  on  Short-Term  Market  Interventions  and  Long-Term 

Improvements  to  the  Electricity  Market  Design,  the  Commission  considers  that  it  could  be 

acceptable  in  the  current  context  to  extend  price  regulation  to  small  and  medium-sized 

enterprises  (SMEs).  Given  that  the  EU  energy  legislation  does  not  envisage  any  specific 

framework  for  these  consumers,  allowing  Member  States  to  extend  interventions  in  price 

setting  in  the  form  of  regulated  prices  to  small  and  medium  enterprises  during  this  crisis 

would  give  them  another  tool  to  manage  its  impact.  This  approach  reflects  the  fact  that  the 

current  energy  market  situation  with  high  and  volatile  wholesale  gas  and  electricity  prices 

may be restricting competition and harming customers in the SME segment. However, such a 

possibility should maintain the incentive to reduce consumption and thus be limited to 80% of 

their historical consumption.  

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COM(2022) 108 final 

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Public  interventions  in  price  setting  for  electricity  which  is  below  cost  could  be  a  way  for 

some Member States to directly alleviate the impact of the crisis on consumers. Nonetheless, 

such  measures  also  have  significant  impacts  on  the  functioning  of  competition  in  the  retail 

market,  on  innovation,  and  on  the  incentive  to  reduce  demand.  This  is  why,  even  as  an 

emergency measure, they need to be accompanied by safeguards to ensure non-discriminatory 

treatment of suppliers and an incentive for demand reduction.  

Ensuring  that  the  internal  electricity  market  gives  Member  States  the  tools  and  flexibility 

needed to respond to the crisis is a critical part of the solidarity needed. However, whether to 

use  these  possibilities  should  remain  the  choice  of  Member  States  who  are  best  placed  to 

determine the efficacy of such measures, particularly compared to other tools, and to match 

them to the need to target support to where it most needed.  

3. 

SOLIDARITY CONTRIBUTION  

Not  only  electricity  generating  companies,  but  also  the  fossil  fuel  sector  is  benefiting  from 

extreme price increases due to the current market situation, generating profits that go beyond 

the  result  of  usual  business  activities.  Soaring  energy  and  electricity  prices  are  putting  a 

significant burden on public authorities, consumers, and businesses alike, and action is needed 

to  avoid  the  risk  that  prices  reach  unsustainable  levels,  with  far  greater  and  potentially 

detrimental  social  and  economic  implications.  These  developments  call  for  a  collective 

response at Union level. EU leaders and the Commission have therefore identified an urgent 

need  for  additional  measures  to  mitigate  the  impact  of  these  events  on  EU  citizens  and 

economic operators, and to stave off an even more acute crisis. 

In  order  to  financially  support  the  measures  that  are  necessary  to  react  to  current  crisis 

situations for households and businesses, those that generate excess profits need to contribute 

a portion of them in the spirit of solidarity. 

This  Regulation  introduces  a  solidarity  contribution  for  the  fossil  industry  applicable  in  all 

Member  States.  This  solidarity  contribution  is  an  exceptional  and  temporary  measure 

appropriate to the current situation that Member States would take in a spirit of solidarity to 

mitigate  the  direct  economic  effects  of  the  soaring  energy  prices  for  public  authorities’ 

budgets, consumers and businesses across the Union. 

Introducing a temporary solidarity contribution will ensure that these sectors also contribute 

in proportion to the profits generated by the crisis situation. At the same, time the design of 

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the contribution will ensure that there are sufficient funds available to finance the investments 

necessary to invest in the energy transition and new technologies including at EU level. 

To  that  end,  this  proposal  establishes  a  measure  that  consists  of  a  temporary  solidarity 

contribution based on taxable surplus profits made in the fiscal year 2022 from companies and 

permanent  establishments  active  only  in  the  oil,  gas,  coal  and  refinery  sectors  that  is 

commensurate and appropriate to the current socio-economic situation. The contribution will 

finance measures that help mitigate the current crisis, in a spirit of solidarity between Member 

States.  The  measure  will  enable  a  redistribution  of  resources  and  financial  support  to 

households  and  businesses  to  mitigate  the  effects  of  sustained  high  energy  prices,  reduce 

energy  consumption,  support  energy  intensive  industries  targeting  renewable  energies  or 

energy  efficiency  and  develop  the  Union’s  energy  autonomy,  to  the  benefit  of  all  Member 

States.  Moreover,  the  current  disruption  to  gas  supplies  and  resulting  impacts  on  gas  and 

electricity  prices,  higher  demand  for  energy  resulting  from  record-breaking  summer 

temperatures,  combined  with  reduced  availability  of  certain  power  generators  constitutes  a 

severe difficulty in the supply of a specific – in this case energy – product. The measure will 

help  preserve  the  smooth  functioning  of  the  internal  market  and  ensure  the  necessary 

solidarity  between  Member  States.  The  distribution  of  the  surplus  profits  as  set  out  in  this 

instrument is without prejudice to the application of Article 107 and 108 TFEU. 

4. 

CONSISTENCY WITH EXISTING POLICY PROVISIONS IN THE POLICY AREA  

The  proposed  instrument  sets  out  temporary,  proportionate  and  extraordinary  measures.  It 

complements  existing  relevant  EU  initiatives  and  legislation  and  is  complementary  to  the 

initiatives already taken by the Commission to respond to the current crisis in energy markets. 

It flows logically from existing initiatives, such as the Energy Prices Toolbox67 adopted on 13 

October 2021 and the “REPowerEU” Plan of 18 May 2022, which contains a list of measures 

that Member States can use to support consumers and complementary to the “Save Gas for a 

Safe Winter” initiative.  

6 

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COM  (2021)  660  final  of  13  October  2021:  Tackling  rising  energy  prices:  a  toolbox  for  action  and 
support 

COM (2022) 236 final 

12 

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In  addition,  the  demand  reduction  elements  of  the  proposed  Regulation  will  support  the 

recently  adopted  Storage  Regulation  (EU)  2022/10328  by  reducing  the  need  for  electricity 

production from gas, thereby helping Member States to preserve gas stocks obtained through 

the storage filling obligations and safeguard supply for the winter of 2022–2023. 

Extending  the  scope  of  State  interventions  in  line  with  the  measures  proposed  in  the 

Regulation is justified by the gravity of the current situation on electricity markets.  

The  proposed  initiative  responds  to  the  increased  retail  price  burden  being  felt  by  all 

electricity consumers and the need to reduce demand and save gas this winter as a result of 

Russia’s war against Ukraine.  

Given  the  design  of  the  proposed  initiative,  notably  the  level  and  temporary  nature  of  the 

proposed  cap  on  market  revenues  for  the  generation  of  electricity  from  inframarginal 

technologies, the Commission considers that the proposal is consistent with the objectives of 

the European Climate Law. 

5. 

CONSISTENCY WITH OTHER UNION POLICIES 

The proposal is an extraordinary measure, to be applied for a limited time, that is consistent 

with a broader set of initiatives to enhance the Union’s energy resilience and to mitigate the 

risk or impact of possible emergency situations. The proposal preserves the functioning of the 

internal  market  and  does  not  compromise  its  integrity,  as  functioning  cross-border  energy 

markets are key to ensure security of supply in a situation of supply shortages. Providing for 

more  coordinated  electricity  demand  reductions,  it  is  also  in  line  with  the  Commission’s 

Green  Deal  ambition  and  it  follows  the  same  principles  and  objectives  as  outlined  in  the 

“Save  Gas  for  a  Safe  Winter”  initiative.  Finally,  the  proposal  is  in  line  with  the  consumer 

protection principles, aiming to ensure affordable energy prices for consumers across the EU. 

6. 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The legal  basis for this instrument is  Article 122(1) of the  Treaty on the  Functioning of the 

European Union (‘TFEU’). 

8 

Regulation  (EU)  2022/1032  of  the  European  Parliament  and  the  Council  of  29  June  2022  amending 
Regulation (EU) 2017/1938 and (EC) No 715/2009 with regard to gas storage, OJ L 173/17 of 30 June 
2022. 

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The current disruption to gas supplies and resulting impacts on gas and electricity prices, and 

higher demand for energy resulting from record-breaking temperatures this summer combined 

with  reduced  availability  of  certain  power  generators  constitute  a  severe  difficulty  in  the 

supply  of  energy  products  –  in  this  case  energy  –  pursuant  to  Article  122  TFEU.  Soaring 

electricity  prices  are  putting  a  significant  burden  on  consumers  and  businesses,  and  if  no 

action  is  taken,  they  risk  reaching  unsustainable  levels,  which  could  have  significant  wider 

social and economic implications. EU leaders and the Commission have identified the urgent 

need for additional measures to mitigate the impact on EU citizens and be better prepared for 

the coming winter.  

The temporary measures under the proposed Regulation embody the principle of solidarity in 

the  area  of  energy  and  allow  Member  States  to  have  a  coordinated  approach  to  protecting 

consumers without compromising the functioning of the internal electricity market. 

With a view to avoiding the significant distortions of the internal market and supply chains, 

potentially accentuating the security of supply risk for this winter, it is crucial that all Member 

States act jointly and in a spirit of solidarity as soon as possible. All Member States have been 

negatively  affected  by  the  current  crisis,  but  not  all  are  equally  financially  able  to  support 

consumers.  This  may  lead  to  a  situation  in  which  some  Member  States  provide  support  to 

consumers while others may not be able to afford to do so or might hesitate to intervene with 

measures that may negatively affect the internal electricity market.  

A  coordinated  effort  to  reduce  demand  and  redistribute  excess  revenues  to  struggling 

consumers  is  the  best  way  to  navigate  the  challenges  ahead  of  this  winter.  By  coordinating 

demand reduction, preserving the ability to import electricity when needed and using excess 

revenues  to  support  consumers,  Member  States  will  be  able  to  cater  for  better  support  to 

consumers and businesses, thereby mitigating the impact  of inflation in  the whole  economy 

and  strengthening  the  resilience  of  the  EU  internal  market.  Coordinated  action  is  also 

necessary to contribute to better solvency for citizens and businesses, thereby mitigating the 

impact of inflation on the whole Union economy. All Member States should share the burden 

and contribute to the joint effort of supporting customers to avoid undermining the principles 

of the single market.  

While  Member  States  are  affected  differently  by  the  impact  of  the  gas  supply  shortages  on 

electricity prices, all Member States need to commit to this measure to reduce their electricity 

consumption at the same level. Coordinated efforts at EU level to reduce electricity demand 

EU-wide will lower overall consumption of electricity in  the  entire Union, leading  to  lower 

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wholesale  electricity  prices  and  subsequent  lower  prices  for  consumers.  The  reduction  of 

electricity  demand  during  peak  hours  will  also  result  in  a  reduced  need  for  gas-fired  power 

plants as there will be less overall demand for electricity. Such a coordinated response will tap 

the potential of electricity savings in the EU, which would not be possible to the same extent 

absent coordinated action of all Member States at EU level. All Member States will contribute 

to the joint effort of bringing prices down and preventing security of supply risks. Since in the 

internal  electricity  market  the  Member  States’  electricity  systems  are  highly  integrated,  the 

measure could be effective only if all Member States play their part in reducing demand.   

In  the  same  vein,  the  solidarity  between  Member  States,  through  a  uniform  cap  on  the 

revenues of inframarginal generation technologies will generate revenues for Member States 

to  finance  measures  in  support  of  electricity  final  customers,  while  at  the  same  time 

preserving the price signals on the markets across Europe, and preserving cross-border trade. 

Therefore, it will ensure that electricity in Europe continues to flow to where it is most needed 

and  that  cheaply  produced  electricity  is  exported  to  Member  States  where  the  electricity 

production  is  more  expensive.  Such  a  coordinated  effort  by  Member  States  therefore 

enshrines the principle of energy solidarity between Member States and citizens of the Union.  

Furthermore,  this  measure  is  compatible  with  the  current  way  of  trading  and  pricing 

electricity  around  Europe,  thereby  ensuring  that  energy  trading  and  sharing  remains  intact, 

that  Member  States  can  continue  to  rely  on  their  neighbours  for  imports  and  that  those 

Member States with less domestic generation and limited natural resources are more protected 

from the risks of supply disruptions. It is therefore justified to base the proposed instrument 

on Article 122(1) TFEU. 

The  extreme  price  increase  has  led  to  a  situation  where  not  only  many  households  face  a 

significant  challenge  to  pay  their  bills,  but  which  also  constitutes  a  serious  risk  for  the 

economy.  As  the  extent  of  the  current  problems  has  not  been  anticipated  in  the  current 

regulatory framework, it is therefore appropriate to allow State interventions into retail prices 

also for small and medium-sized enterprises and, subject to certain conditions, interventions 

which lead to price levels below the costs of energy suppliers both for households and SMEs.  

However,  the  impact  of  the  gas  supply  shortages  on  electricity  prices,  as  well  as  the 

possibilities to finance support measures from State budget differ between Member States. As 

a  result,  there  are  disproportionate  effects  of  the  crisis  in  some  parts  of  the  Union,  where 

customers are not able to access the energy they need as suppliers withdraw from the market. 

Absent the proposed measures, there is a risk that only Member States with fiscal space could 

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have  the  resources  to  protect  these  customers  and  suppliers,  leading  to  severe  distortions  of 

the internal market. The uniform obligation created by the proposed Regulation to pass on the 

excess  revenues  to  final  consumers  will  ensure  that,  in  principle,  all  Member  States  will  be 

able to protect their customers and to use these additional resources for the same purpose. The 

positive effect on energy prices will have a positive impact on the interconnected EU market 

and  will  also  help  dampening  the  inflation  rate.  Therefore,  national  measures  will,  in  the 

interconnected Union economy, also have a positive effect in other Member States. 

The  collective  establishment,  by  Member  States,  of  a  coordinated,  temporary  solidarity 

contribution based on taxable surplus profits made in the fiscal year 2022 on EU companies 

and permanent establishments in the oil, gas, coal and refinery sectors in the Union governed 

by  common  framework  is  needed  to  help  protect  consumers  and  businesses  against  soaring 

energy prices across the whole Union while preserving the smooth functioning of the internal 

market and ensuring the necessary solidarity between Member States. It is therefore justified 

to  base  the  proposed  instrument  on  Article  122(1)  TFEU.  The  establishment  of  a  solidarity 

contribution  adds  an  element  of  fairness  to  the  package  of  measures  to  be  launched  in  the 

context of the emergency intervention on energy.  

This proposal therefore ensures that all Member State coordinate their efforts.  It reflects the 

principle of energy solidarity, which has recently been confirmed by the Court of Justice as a 

fundamental principle of EU law9. 

Subsidiarity (for non-exclusive competence)  

The planned measures of the present initiative are fully in line with the subsidiarity principle. 

Because  of  the  significant  uncertainty  in  the  Union  electricity  market  and  the  resulting 

extraordinary high prices caused by the weaponisation of gas supply by Russia, there is a need 

for  action  at  Union  level.  A  coordinated  approach  through  Union-wide  electricity  demand 

reduction,  in  the  spirit  of  solidarity,  is  necessary  to  minimise  the  risk  of  potential  major 

disruptions during the winter months when electricity consumption and electricity production 

from gas will be higher. 

Given  the  unprecedented  nature  of  the  gas  supply  crisis  and  the  role  of  gas  as  a  key 

technology to meet electricity demand, action at Union level regarding electricity markets is 

also  warranted.  Member  States  must  be  able  to  rely  on  imports  if  and  when  needed  this 

winter, underlining the importance of the internal electricity market. Power must continue to 

9 

Judgment in Case C-848/19 P (Germany v Poland). 

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flow  around  Europe  to  avoid  a  high-price  crisis  becoming  a  security  of  supply  crisis. 

However,  this  must  be  affordable  and  the  disproportionate  effects  on  consumers’  electricity 

bills should be tackled. To preserve the functioning of the electricity system and cross-border 

trade and investments, a common approach to cap the revenues for inframarginal technologies 

is both reasonable, appropriate and proportionate.  

Concerning electricity, this proposal sets the final result to be achieved by the measures, in the 

form  of  setting  out  demand  reduction  measures  and  legally  binding  obligations  on  energy 

reduction  when  electricity  prices  are  at  their  highest  and  the  limitation  of  the  revenues  of 

inframarginal  technologies.  At  the  same  time,  it  gives  Member  States  full  autonomy  in 

choosing  the  most  effective  means  to  meet  these  obligations  according  to  their  national 

specificities  and  widens  the  possibility  for  Member  States  to  intervene  in  price  regulation. 

More specifically: 

 

 

 

Regarding  demand  reduction  for  electricity,  the  proposed  Regulation  sets  binding 
targets  to  be  achieved  while  leaving  Member  States  the  choice  of  the  means  to 
achieve those targets. 

Regarding  the  cap  on  revenues  to  fund  support  to  consumers,  the  proposed 
Regulation  sets  a  uniform  cap  applicable  in  the  Union.  However,  Member  States 
retain the right to introduce further limitations, as long as they are proportionate, do 
not  distort  the  functioning  of  electricity  wholesale  markets,  ensure  that  the 
investment costs are covered, do not jeopardise investment signals, and that they are 
in line with Union Law. The surplus revenues will be used to support consumers, but 
Member  States  will  have  full  autonomy  regarding  the  means  of  ensuring  that  the 
surplus revenues reach consumers.  

Regarding measures of  public intervention in  retail prices, the proposed Regulation 
actually  enlarges  Member  States’  scope  to  take  such  measures  compared  to  the 
current  legislative  framework  at  Union  level,  which  is  in  line  with  the  principle  of 
subsidiarity.  

As concerns the measure in the fossil sector, the temporary solidarity contribution tackles the 

challenge  faced  by  all  Member  States  which  is  currently  being  addressed  in  disparate  ways 

with  a  framework  governing  a  solidarity  contribution  at  the  European  level.  The  common 

initiative at Union level, consisting of the mandatory introduction of a solidarity contribution 

in  each  Member  State  for  certain  companies  and  permanent  establishments  predominantly 

active in oil, gas, coal  and refinery sectors. This problem cannot be appropriately addressed 

by Member States alone.  

A  solidarity  contribution  introduced  by  this  Regulation  will  increase  revenues  for  the  State 

budget  and  enable them  to  finance measures aimed at  alleviating the burden of high energy 

costs  for  consumers,  in  particular  vulnerable  persons  and  companies.  However,  not  every 

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Member State has introduced such measures, and the content of the already adopted measures 

varies from Member State to Member State. 

Hence, a mandatory solidarity contribution on surplus profits governed by a common Union 

framework will ensure a sufficient level playing field across the Union and a situation where 

all  Member  States’  authorities  can  reap  the  proceeds  from  such  surplus  profits  that  would 

enable  them  to  better  tackle  the  exceptional  event  of  soaring  energy  prices,  which  requires 

urgent action in all Member States. Therefore, an EU initiative would add value, as compared 

to individual actions taken at national level.  

Therefore,  by  reason  of  its  scale  and  effects,  the  measure  can  be  better  achieved  at  Union 

level, hence the Union may adopt measures, in accordance with the principle of subsidiarity 

as set out in Article 5 of the Treaty on European Union.  

Proportionality 

The initiative complies with the proportionality principle. Within the scope of Article 122(1) 

TFEU, the policy intervention is appropriate to the economic situation and proportional to the 

dimension and nature of the problems defined and the achievement of the set objectives.  

In  view  of  the  unprecedented  geopolitical  situation  and  the  significant  threat  for  citizens’ 

livelihood  and  the  EU  economy,  there  is  a  clear  need  for  coordinated  action.  Coordinated 

efforts at reducing overall electricity consumption as well as electricity consumption at peak 

hours,  capping  the  revenues  achieved  by  inframarginal  electricity  producers  and  giving 

Member States more scope for public intervention in retail price-setting are suitable means to 

reduce the existing upward pressure on electricity prices to the detriment of consumers. At the 

same  time,  no  other,  less  intrusive  measures  can  be  envisaged  that  would  as  effectively 

achieve that objective.  

The proposed solidarity contribution respects the proportionality principle in that it does not 

go beyond what is necessary to achieve the objectives. It is based on a calculation base and 

rate, which ensure that profits are partly subject to such a contribution without unnecessarily 

impeding the energy companies in the oil, gas, coal and refinery sectors to use such surplus 

profits for future investment or for ensuring their viability. That is why the rate proposed in 

the regulation is limited to one third of the surplus taxable profits, after a buffer is applied to 

the  tax  base.  However,  and  to  ensure  that  Member  States’  specific  circumstances  are 

safeguarded, the proposed rate is a minimum rate and Member States may apply a higher rate 

in case they deem it is necessary. 

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The solidarity contribution is also of a temporary nature and limited to those surplus profits 

made in  the  fiscal  year  2022, and is  applied only  to  surplus profits of the oil, gas, coal  and 

refinery  sectors,  taking  into  consideration  the  unexpected  profits  earned  as  a  result  of 

unpredictable circumstances. Those Member States that have a domestic levy or tax already in 

place  exceeding  the  proposed  rate  of  the  solidarity  contribution,  may  continue  to  apply  the 

existing higher rate to cater for the national specificities that led them to adopt such rate. 

Hence, the proposal does not go beyond what is necessary to achieve the objectives laid down 

in  the  current  instrument.  The  proposed  measures  are  considered  proportionate  and  build  to 

the extent possible on existing initiatives, which have been welcomed by Member States.  

Choice of instrument 

Taking  into  account  the  scale  of  the  energy  crisis,  the  potential  of  its  social,  economic  and 

financial impacts and the urgency to mitigate them, the Commission deems it suitable to act 

by  way  of  a  regulation  which  is  of  general  scope  and  directly  and  immediately  applicable. 

This would result in a swift, uniform and Union-wide cooperation mechanism. 

7. 

STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS 

Stakeholder consultations 

Due to the politically sensitive nature of the proposal and urgency to prepare the proposal so 

that it can be adopted on time by the Council, a dedicated stakeholder consultation could not 

be carried out. 

However,  the  Commission  plans  to  engage  with  stakeholders,  and  notably  energy  intensive 

industries, for ensuring a successful implementation of this Regulation.  

Given  the  temporary  and  urgent  nature  of  the  measures  that  respond  to  an  emergency 

situation, an impact assessment could not be carried out. 

Fundamental rights 

No  negative  impact  has  been  identified  on  fundamental  rights.  The  measures  under  this 

instrument  will  not  affect  the  rights  of  customers  who  are  categorised  as  protected  under 

Regulation  (EU)  2017/1938,  including  all  household  customers.  Furthermore,  the  cap  on 

revenues  and  the  introduction  of  a  temporary  solidarity  contribution  in  the  proposed 

Regulation  fully  take  into  account  the  need  to  protect  legitimate  expectations  and  existing 

investments,  and  therefore  will  not  jeopardise  the  right  to  own  and  use  lawfully  acquired 

possessions. The instrument will enable Member States to reduce the risks associated with the 

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gas  shortage  and  the  resulting  surge  of  energy  prices  that  would  otherwise  have  major 

implications on the economy and society. By ensuring that suppliers who are required to sell 

electricity below cost are compensated it is ensured that such persons are not deprived of their 

fundamental rights, albeit without prejudice to the application of State aid rules.  

8. 

BUDGETARY IMPLICATIONS 

This proposal does not require additional resources from the EU budget. 

9. 

OTHER ELEMENTS 

Not relevant. 

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2022/0289 (NLE) 

Proposal for a 

COUNCIL REGULATION 

on an emergency intervention to address high energy prices 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 

Article 122(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

10

11 

Very high prices in electricity markets have been observed since September 2021. As 
set out by ACER in its assessment of EU wholesale electricity market design in April 
202210, this is mainly a consequence of the high price of gas, which is used as an input 
to  generate  electricity.  Natural  gas-fired  power  plants  are  often  needed  to  satisfy  the 
demand for  electricity when the demand is  at  its highest  during the day  or when the 
volumes  of  electricity  generated  from  other  technologies  such  as  nuclear,  hydro  or 
variable renewable energy sources do not suffice to cover demand. The escalation of 
the  Russian  military  aggression  against  Ukraine,  a  Contracting  Party  of  the  Energy 
Community,  since  February  2022  has  led  to  gas  supplies  declining  markedly.  The 
Russian  invasion  of  Ukraine  has  also  caused  uncertainty  on  the  supply  of  other 
commodities, such as hard coal and crude oil, used by power-generating installations. 
This  has  resulted  in  substantial  additional  increases  in  and  volatility  of  the  price  of 
electricity. 

The recent substantially lower levels of gas delivery and increased disruptions of gas 
supply  from  Russia  point  to  a  significant  risk  that  a  complete  halt  of  Russian  gas 
supplies may materialise in the near future. To increase the Union’s security of energy 
supply,  the  Council  adopted  Regulation  (EU)  2022/136911  that  provides  for  a 
voluntary  reduction  of  natural  gas  demand  by  15%  this  winter  and  grants  the 
possibility for the Council to declare a Union alert on security of supply, in which case 
the gas demand reduction would become mandatory.  

In parallel, the exceptionally high temperatures observed during the summer of 2022 
have  pushed  up  demand  for  electricity  for  cooling,  adding  pressure  on  electricity 
generation while, at the same time, electricity generation from certain technologies has 
been  significantly  below  historical  levels  due  to  technical  and  weather-dependant 
circumstances. This is due mainly to an exceptional drought which led to (i) a shortfall 

 https://acer.europa.eu/Official_documents/Acts_of_the_Agency/Publication/ACER's%2520Final%2520
Assessment%2520of%2520the%2520EU%2520Wholesale%2520Electricity%2520Market%2520Desig
n.pdf 
Regulation (EU) 2022/1369 of 5 August 2022 on coordinated demand-reduction measures for gas (OJ L 
206, 8.8.2022, p. 1). 

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in  the  production  of  electricity  by  nuclear  power  plants  in  different  Member  States 
caused by the lack of available cooling water, (ii) scarce hydropower generation and 
(iii)  low  water  levels  in  major  rivers  which  have  adversely  affected  the  transport  of 
commodities  used  as  input  fuel  for  generation.  This  unprecedented  situation  means 
that  the  volumes  of  electricity  generated  from  natural  gas-fired  power  plants  have 
stayed persistently high, contributing to exceptionally and abnormally high wholesale 
electricity  prices.  Despite  the  reduced  availability  of  generation  capacities  in  some 
Member  States,  electricity  exchanges  between  Member  States  have  helped  to  avoid 
security  of  supply  incidents  and  contributed  to  mitigating  price  volatility  on  the  EU 
markets, thereby enhancing each Member State’s resilience to price shocks. 

The price surge in wholesale electricity markets has led to sharp increases in electricity 
retail  prices,  which  are  expected  to  continue  ahead  of  the  next  heating  season 
gradually trickling down to most consumer contracts. The sharp increase in gas prices 
and  the  resulting  demand  for  alternative  fuels  has  also  led  to  an  increase  of  other 
commodity prices such as oil and coal prices.  

All Member States have been negatively affected by the current energy crisis, albeit to 
a different  extent. The stark increase of energy prices is  substantially  contributing to 
the general inflation in the euro area and slowing down economic growth in the Union.  

A  rapid  and  coordinated  response  is  therefore  needed.  The  deployment  of  an 
emergency  tool  would  allow  mitigation,  on  a  temporary  basis,  of  the  risk  that 
electricity  prices  and  the  cost  of  electricity  for  final  customers  reach  even  less 
sustainable  levels  and  that  Member  States  adopt  uncoordinated  national  measures, 
which could endanger security of supply at Union level and put an additional burden 
on  the  Union’s  industry  and  consumers.  In  a  spirit  of  solidarity  between  Member 
States, a coordinated effort by Member States during the next winter season 2022-23 is 
required to mitigate the impact of high energy prices and ensure that the current crisis 
does  not  lead  to  lasting  harm  for  consumers  and  the  economy,  while  preserving  the 
sustainability of public finances.  

The  current  disruptions  to  gas  supplies,  reduced  availability  of  certain  power 
generating plants, and the resulting impacts on gas and electricity prices, constitute a 
severe  difficulty  in  the  supply  of  gas  and  electricity  energy  products  within  the 
meaning  of  Article  122(1)  of  the  Treaty  on  the  Functioning  of  the  European  Union. 
There is a serious risk that the situation could deteriorate further in the coming winter 
season in case of further disruptions of gas supplies and a cold winter season driving 
up  the  demand  for  gas  and  electricity.  Such  further  deterioration  could  lead  to  more 
upward  pressure  on  the  price  of  gas  and  other  energy  commodities’  prices  with  a 
resulting impact on electricity prices.  

A  united  and  well-coordinated  Union-wide  response  is  needed  to  tackle  the  stark 
increase  of  electricity  prices  and  their  impact  on  households  and  industry. 
Uncoordinated  national  measures  could  affect  the  functioning  of  the  internal  energy 
market,  endangering  security  of  supply  and  leading  to  further  price  increases  in  the 
Member  States  most  affected  by  the  crisis.  Safeguarding  the  integrity  of  the  internal 
electricity market is therefore crucial to preserve and enhance the necessary solidarity 
between Member States.  

(4) 

(5) 

(6) 

(7) 

(8) 

(9)  While  some  Member  States  might  be  more  exposed  to  the  effects  of  a  disruption  of 
Russian  gas  supplies  and  the  resulting  price  increases,  all  Member  States  can 
contribute  to  limiting  the  economic  harm  caused  by  such  disruption  by  appropriate 
demand reduction measures. Reducing electricity demand at national level can have a 

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positive, Union-wide effect on electricity prices, as electricity markets are coupled and 
savings in one Member State thus benefit also other Member States. 

(10)  Uncoordinated caps on revenues from electricity produced from generators with lower 
marginal costs such as renewables, nuclear, and lignite (inframarginal generators) may 
lead to significant distortions between generators in the Union, as generators compete 
EU-wide on a coupled electricity market. A commitment to a joint Union-wide cap on 
surplus revenues will avoid such distortions. Furthermore, not all Member States can 
support consumers to the same extent due to limited financial resources, while at the 
same  time,  some  electricity  generators  may  continue  enjoying  significant  surplus 
revenues.  Solidarity between Member States,  through a uniform  cap on  the revenues 
of inframarginal generation technologies will generate revenues for Member States to 
finance measures in support of electricity final customers, such as households, SMEs 
and energy intensive industries, while at the same time preserving the price signals on 
the markets across Europe and preserving cross-border trade. 

(11)  With  a  view  to  the  extreme  increase  of  retail  gas  and  electricity  prices,  State 
interventions  to  protect  retail  consumers  are  of  particular  importance.  However,  the 
impact of the gas supply shortages on electricity prices, as well as the possibilities to 
finance  support  measures  from  State  budget  differ  between  Member  States.  If  only 
some  Member  States  with  sufficient  resources  can  protect  these  customers  and 
suppliers,  this  would  lead  to  severe  distortions  of  the  internal  market.  A  uniform 
obligation to pass on the surplus revenues to final consumers allows all Member States 
to  protect  their  consumers.  The  positive  effect  on  energy  prices  will  have  a  positive 
impact  on  the  interconnected  EU  market  and  will  also  help  dampening  the  inflation 
rate. Therefore, in  a spirit of solidarity, national  measures will, in the interconnected 
Union economy, also have a positive effect in other Member States.  

(12)  The  measure  consisting  of  the  solidarity  contribution  for  fossil  companies  with 
activities  in  the  oil,  gas,  coal  and  refinery  sector  is  an  exceptional  and  strictly 
temporary measure. It appears appropriate in the current situation that action is taken 
at  Union  level  is  taken  to  mitigate  the  direct  economic  effects  of  the  soaring  energy 
prices for public authorities’ budgets, consumers and companies across the Union. 

(13)  The  solidarity  contribution  is  an  appropriate  means  to  tackle  surplus  profits,  due  to 
unforeseen  circumstances.  Those  profits  do  not  correspond  to  any  regular  profit  that 
these entities would or could have expected to obtain in normal circumstances would 
the  unpredictable  events  in  the  energy  markets  not  have  taken  place.  Therefore,  the 
introduction  of  a  solidarity  contribution  constitutes  a  joint  and  coordinated  measure 
which  affords,  in  a  spirit  of  solidarity,  generating  additional  proceeds  for  national 
authorities to provide financial support to households and companies heavily affected 
by the soaring energy prices while ensuring a level playing field across the Union and 
the internal market. It should be applied in parallel to the regular corporate taxes levied 
by each Member State on the companies concerned. 

(14)  To  ensure  coherence  across  energy  policy  areas,  the  measures  should  work  as  an 
interdependent  package  reinforcing  each  other.  All  Member  States  should  be  able  to 
support consumers, in a targeted manner, through surplus revenues resulting from the 
cap on market revenues for inframarginal electricity generation, through the reduction 
of  electricity  demand,  which  contributes  to  lowering  energy  prices,  and  through 
proceeds from a solidarity contribution imposed on fossil companies with activities in 
the  oil,  gas,  coal  and  refinery  sector.  At  the  same  time,  lower  demand  should  have 

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positive  effects  in  terms  of  reducing  the  risks  to  security  of  supply,  in  line  with  the 
objectives of Directive (EU) 2019/944.  

(15)  Member  States  should  therefore  endeavour  to  reduce  their  total  gross  electricity 
consumption from all consumers including those who are not yet equipped with smart 
metering  systems  or  devices  enabling  them  to  monitor  their  consumption  during 
specific hours of the day. 

(16)  To  preserve  fuel  stocks  for  electricity  generation  and  to  specifically  target  the  most 
expensive  hours  of  electricity  consumption,  when  gas-fired  power  generation  has  a 
particularly  significant  impact  on  the  marginal  price,  each  Member  State  should 
reduce its gross electricity consumption during identified peak price hours.   

(17)  Based  on  the  typical  electricity  consumption  profile  within  peak  hours,  a  binding 
target of 5% during peak price hours would ensure that Member States address more 
specifically consumers who can deliver flexibility through demand reduction offers on 
an  hourly  basis,  including  via  aggregators.  Therefore,  an  active  electricity  demand 
reduction  of  at  least  5%  during  selected  hours  should  lead  to  a  reduced  gas 
consumption and to a smoother repartition of demand across hours, impacting hourly 
market prices.  

(18)  Member  States  should  have  the  discretion  to  choose  the  appropriate  measures  to 
achieve  the  demand  reduction  targets  so  that  they  can  reflect  national  specificities. 
When designing electricity demand reduction measures, Member States should ensure 
that  such  measures  are  designed  so  as  not  to  undermine  the  Union  electrification 
objectives  as set  out  in  the Communication on Powering a  climate-neutral  economy: 
An  EU  Strategy  for  Energy  System  Integration.  Electrification  is  key  to  reduce  EU 
dependence on fossil fuels and ensure long-term strategic autonomy of the European 
Union  as  this  leads  to  limiting  the  magnitude  of  this  energy  crisis  and  preventing 
future  energy  crisis.  Measures  to  reduce  the  gross  electricity  consumption  might 
include national awareness-raising campaigns, publishing targeted information on the 
forecasted  situation  in  the  electricity  system,  regulatory  measures  limiting  non-
essential  energy  consumption,  and  targeted  incentives  to  reduce  the  electricity 
consumption. 

(19)  When  identifying  appropriate  demand  reduction  measures  in  the  peak  price  hours, 
Member States should in particular consider market-based measures such as auctions 
or tender schemes, by which they could incentivise a reduction of consumption in an 
economically efficient manner. To ensure efficiency and fast implementation, Member 
States could  use existing initiatives  and expand existing schemes to develop  demand 
response. The measures taken at national level could also include financial incentives 
or  compensation  to  market  participants  affected,  if  a  tangible  demand  reduction  is 
achieved in addition to expected normal consumption.  

(20)  To  assist  and  provide  guidance  to  Member  States  delivering  the  necessary  demand 
reductions set out in this Regulation, the Commission  should facilitate the sharing of 
best practices between Member States.  

(21)  Given the extraordinary and sudden surge in electricity prices and the imminent risk of 
further  increases,  it  is  necessary  for  Member  States  to  immediately  establish  the 
measures needed to achieve reductions of the gross electricity consumption in order to 
facilitate rapid price reductions and to minimise the use of fossil fuels. 

(22) 

In  the  day-ahead  wholesale  market,  the  least  expensive  power  plants  are  dispatched 
first but the price received by all market participants is set by the last plant needed to 

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cover the demand, i.e., that  with  the highest  marginal  costs, when the market  clears. 
The recent surge in  the  price of  gas and hard coal  has translated into  an  exceptional 
and  lasting  increase  of  the  prices  at  which  the  gas  and  coal-fired  power  generation 
facilities bid in the day-ahead wholesale market. That in turn has led to exceptionally 
high  prices  in  the  day-ahead  market  across  the  Union,  as  those  are  often  the  plants 
with the highest marginal costs needed to meet the demand for electricity.  

(23)  Given the role of the price in the day-ahead market as a reference for the price in other 
wholesale  electricity  markets,  and  the  fact  that  all  market  participants  receive  the 
clearing  price,  the  technologies  with  significantly  lower  marginal  costs  have 
consistently  recorded  high  revenues  since  the  invasion  of  Ukraine  by  Russia  in 
February 2022, well above their expectations when deciding to invest. 

(24) 

In a situation where consumers are exposed to extremely high prices which also harm 
the Union’s economy, it is necessary to limit, on a temporary basis, the extraordinary 
market revenues of producers with lower marginal costs by way of application of a cap 
for such market revenues achieved through the sale of electricity within the Union.  

(25)  The level at which the cap on the revenues is set should not jeopardise the ability of 
the producers to which it is applied, including renewable energy producers, to recover 
their  investment  and  operating  costs  and  should  preserve  and  incentivise  future 
investments in the capacity needed for a decarbonised and reliable electricity system. 
A uniform cap on revenues across the Union is necessary to preserve the functioning 
of  the  internal  electricity  market,  as  it  would  maintain  price-based  competition 
between  electricity  producers  based  on  different  technologies,  in  particular  for 
renewables. 

(26)  While occasional and short-term peaks on prices can be considered a normal feature in 
an electricity market and may be useful for some investors to recover their generation 
investment,  the  extreme  and  lasting  price  increase  observed  since  February  2022  is 
markedly  different  from  a  normal  market  situation  of  occasional  peak  prices. 
Therefore,  the  cap  should  not  be  set  below  the  reasonable  expectations  of  market 
participants as to the average level of electricity prices in the hours during which the 
demand  for  electricity  was  at  its  highest,  before  the  invasion  of  Ukraine  by  Russia. 
Before  February  2022,  the  average  peak  prices  in  the  electricity  wholesale  market 
were  significantly  and  consistently  expected  below  180  Euros  per  MWh  across  the 
Union in the last decades, despite the differences in electricity prices between regions 
in  the  Union.  Since  the  initial  investment  decision  of  market  participants  was  taken 
based  on  an  expectation  that,  on  average,  the  prices  would  be  lower  than  that  level 
during peak hours, setting a cap at a 180 EUR per MWh constitutes a level well above 
those initial market expectations. By leaving a margin on the price that investors could 
reasonably  have  expected,  it  is  necessary  to  ensure  that  the  revenue  cap  does  not 
counteract the initial assessment of investment profitability.  

(27)  Moreover, the cap of 180 EUR per MWh is consistently higher, including a reasonable 
margin,  than  the  current  levelised  cost  of  energy  (LCOE)  for  all  the  relevant 
generation  technologies,  allowing  producers  to  which  it  applies  to  cover  their 
investments  and  operating  costs.  Considering  that  the  calculation  chosen  in  this 
proposal leaves a considerable margin between the reasonable LCOE and the revenue 
cap,  the  cap  can  therefore  not  be  expected  to  impair  the  investment  in  new 
inframarginal capacities. 

(28)  The  cap  should  be  set  on  market  revenues  rather  than  on  total  generation  revenues 
(including  other  potential  sources  of  revenues  such  as  feed-in  premium),  to  avoid 

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significantly impacting the initial expected profitability of a project. Regardless of the 
contractual form in which the trade of electricity may take place, the cap should apply 
to realised market revenues only. This is necessary to avoid harming producers who do 
not actually benefit from the current high electricity prices due to having hedged their 
revenues against fluctuations in the wholesale electricity market. Hence, to the extent 
that  existing  or  future  contractual  obligations,  such  as  renewable  power  purchase 
agreements and other types of power purchase agreements or forward hedges, lead to 
market  revenues  from  the  production  of  electricity  up  to  the  level  of  the  cap,  they 
would not be caught by its application.  

(29)  The  measure  introducing  the  cap  on  revenues  should  therefore  not  deter  market 
participants  from  entering  into  renewables  power  purchase  agreements.  Given  the 
direct benefits that they provide to end-consumers, Member States should continue to 
promote them, making use of the Commission Recommendation of 18 May 2022 on 
speeding up permit granting procedures for renewable energy projects and facilitating 
Power  Purchase  Agreements  as  well  as  practices  described  in  Chapter  II  of  the 
guidance in the Annex to this Recommendation.   

(30)  Having  a  uniform  cap  on  revenues  across  the  Union  is  necessary  to  preserve  the 
functioning  of  the  internal  electricity  market  as  it  would  maintain  price-based 
competition  across  the  Union  between  electricity  producers  based  on  different 
technologies, in particular for renewables.  

(31)  While applying the revenue cap at the time when transactions are settled may be more 
efficient,  it  might  not  always  be  possible,  for  instance  due  to  differences  in  the  way 
wholesale electricity markets are organised in the Member States and across different 
timeframes. To account for national specificities and to facilitate the application of the 
cap on revenues at national level, Member States should have the discretion to decide 
whether  to  apply  it  either  when  the  settlement  of  the  exchange  of  electricity  takes 
place or thereafter. 

(32)  Given  that  the  generation  mix  and  the  cost-structure  of  power-generating  facilities 
differ greatly among Member States, they should retain the possibility to further limit 
the  revenues  of  producers,  provided  that  such  measures  are  compatible  with  Union 
law.  

(33)  The cap on revenues should apply to technologies with marginal costs lower than the 

cap, such as for instance wind, solar or nuclear energy. 

(34)  The cap should not apply to technologies with high marginal costs relating to the price 
of  the  input  fuel  necessary  to  produce  electricity,  such  as  gas  and  coal-fired  power 
plants, as their operating costs would be significantly above the level of the cap and its 
application  would  jeopardise  their  economic  viability.  To  maintain  the  incentives  to 
overall  decrease  of  the  consumption  of  gas,  the  cap  on  revenues  should  not  apply 
either  to  technologies  which  directly  compete  with  gas-fired  power  plants  to  offer 
flexibility  to  the  electricity  system  and  bid  in  the  electricity  market  based  on  their 
opportunity costs, such as demand-response and storage.  

(35)  The  revenue  cap  should  not  apply  to  technologies  using  as  input  fuels  that  are 
substitutes for natural gas, such as bio-methane, so as not to jeopardise the conversion 
of existing gas-fired power plants in line with the REPowerEU objectives. 

(36)  To preserve the incentives for the development of innovative technologies, the cap on 

revenues should not apply to demonstration projects. 

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(37) 

In some Member States, the revenues obtained by some generators are already capped 
by way of State measures such as feed-in-tariffs and two-way contracts for difference. 
These  generators  do  not  benefit  from  increased  revenues  resulting  from  the  recent 
spike  of  electricity  prices.  Therefore,  existing  producers  subject  to  that  type  of  State 
measures  should  be  excluded  from  the  application  of  the  cap  on  revenues.  Any  new 
measure  should  be  in  line  with  the  principles  of  the  internal  market,  shall  not  limit 
cross-border trade and shall not lead to an increase of gas consumption.     

(38)  Given  that  by  application  of  the  cap  on  revenues  not  all  Member  States  can  support 
their  final  customers  to  the  same  extent  due  to  circumstances  relating  to  their 
dependence on imports of electricity from other countries, it is necessary for Member 
States  with  net  imports  of  electricity  equal  or  higher  than  100%  to  have  access  to 
agreements to share the surplus revenues with the main exporting country in a spirit of 
solidarity.  Such  solidarity  agreements  are  also  encouraged,  in  particular,  to  reflect 
unbalanced trading relationships. 

(39)  Commercial  and  trading  practices  as  well  as  the  regulatory  framework  in  the 
electricity sector are markedly different from the fossil fuels sector. Given that the cap 
aims to mimic the market outcome that producers could have expected if global supply 
chains  would  function  normally  in  absence  of  the  gas  supply  disruptions  since 
February  2022,  it  is  necessary  for  the  measure  concerning  electricity  producers  to 
apply to the  revenues  resulting from the  generation of  electricity. Conversely, as  the 
temporary solidarity contribution targets the profitability of undertakings active in the 
oil, gas, coal and refinery sectors which has significantly increased compared to prior 
years, it is necessary for it to apply to their profits. 

(40)  Member States should ensure that the surplus revenues resulting from the application 
of  the  cap  in  the  field  of  electricity  are  passed  on  to  final  electricity  customers  to 
mitigate the impact of the exceptionally high electricity prices. The surplus revenues 
should  targeted  to  customers,  including  both  households  and  companies,  who  are 
particularly  strongly  affected  by  high  electricity  prices.  Without  the  proposed 
measures, there is a risk that only wealthier Member States will have the resources to 
protect their consumers, leading to severe distortions in the internal market.  

(41)  The  revenues  from  the  cap  will  help  Member  States  to  finance  measures  such  as 
income transfers, rebates on bills, compensating suppliers for supplying below cost, as 
well investments that would lead to a structural reduction of consumption, in particular 
from  electricity  produced  from  fossil  fuel  sources.  When  support  is  granted  to  non-
household  customers,  these  should  work  towards  undertaking  investments  in 
decarbonisation  technologies,  including  renewable  energies,  for  example  through 
power  purchasing  agreement  or  direct  investments  in  renewables  generation,  or  to 
undertake investments in energy efficiency.  

(42)  Public interventions in price setting for the supply of electricity constitute, in principle, 
a market-distortive measure. Such interventions may therefore only be carried out as 
public  service  obligations  and  are  subject  to  specific  conditions.  Currently  under 
Directive  (EU)  944/2019  regulated  prices  are  possible  households  and  micro-
enterprises  and,  they  are  also  possible  including  below  cost  for  energy  poor  and 
vulnerable  customers.  However,  in  the  presence  of  the  current  exceptional  rise  of 
electricity  prices,  the  toolbox  of  available  measures  that  the  Member  States  have  at 
their disposal to support consumers should be temporarily extended, by providing the 
possibility to extend regulated prices to SMEs and permitting regulated prices below 
cost. Such an extension could be financed by the revenue cap.  

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(43) 

It  is  important  that,  where  below  cost,  regulated  retail  prices  do  not  discriminate 
between suppliers or impose unfair costs on them. Suppliers should therefore be fairly 
compensated  for  costs  they  incur  supplying  at  regulated  prices,  without  prejudice  to 
the  application  of  State  aid  rules.  The  cost  of  below  cost  regulated  prices  should  be 
financed by the revenues stemming from the application of the revenue cap. In order to 
avoid  that  these  measures  increase  demand  for  electricity,  while  still  meeting  the 
energy  needs  of  consumers,  below  cost  regulated  prices  should  cover  only  a  limited 
amount of consumption. 

(44)  Without  substantially  changing  their  cost  structure  and  increasing  their  investments, 
EU  companies  and  permanent  establishments  generating  at  least  75%  of  turnover  in 
the  oil,  gas,  coal  and  refinery  sector,  have  seen  their  profits  spike  due  to  the  sudden 
and unpredictable circumstances of the war, reduced supply of energy  and increasing 
demand due to record high temperatures.  

(45)  The temporary solidarity contribution should act as a redistributing measure to ensure 
that  the  companies  concerned  which  have  earned  surplus  profits  as  a  result  of  the 
unexpected circumstances, contribute in proportion to the improvement of the energy 
crisis in the internal market. 

(46)  The basis for calculating the temporary solidarity contribution is taxable profits of the 
companies and permanent  establishments tax resident in  the EU  in  oil, gas, coal  and 
refinery sectors as determined in bilateral treaties or Member States national tax laws 
for the fiscal year starting on or after 1 January 2022. Member States which tax only 
distributed corporate profits should apply the temporary solidarity contribution to the 
calculated  profits  irrespective  of  their  distribution.  The  fiscal  year  is  determined  by 
reference to the rules in place under Member States’ national laws. 

(47)  Only profits in 2022 above a 20% increase of the average taxable profits generated in 
the  three  fiscal  years  starting  on  or  after  1  January  2019  should  be  subject  to  the 
solidarity contribution. 

(48)  This  approach  ensures  that  part  of  the  profit  margin,  which  is  not  due  to  the 
unpredictable developments in the energy markets following the ongoing illegal war in 
Ukraine could be used by the companies and permanent establishments concerned for 
future  investment  or  for  ensuring  their  financial  stability  during  the  ongoing  energy 
crisis  including  for  the  energy  intense  industry.  This  approach  to  determining  the 
calculation base ensures that the solidarity contribution in different Member States  is 
proportionate. At the same time this approach of setting a minimum rate ensures that 
the solidarity contribution is both fair and proportionate. Member States remain free to 
apply a higher rate in case they already introduced a solidarity contribution, levy or tax 
on  surplus  taxable  profits  of  the  energy  undertakings  within  the  scope  of  this 
Regulation  that  would  exceed  this  rate  of  33%  before  this  Regulation  entered  into 
force. This enables such Member States to maintain their preferred rate they deemed 
acceptable and appropriate under their national legal systems. 

(49)  The  solidarity  contribution  should  be  used  for  i)  financial  support  measures  to  final 
energy  customer,  and  notably  vulnerable  households,  to  mitigate  the  effects  of  high 
energy prices; ii) financial support measures to help reducing the energy consumption; 
iii) financial support measures to support companies in energy intensive industries; iv) 
financial  support  measures  to  develop  the  energy  autonomy  of  the  Union.  Member 
States  should  also  be  enabled  to  assign  a  share  of  the  proceeds  of  the  temporary 
solidarity contribution to common financing.  

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(50)  The  use  of  the  proceeds  for  those  purposes  reflects  the  solidarity  contribution’s 
exceptional nature as a measure that intends to reduce and mitigate the harmful effects 
of the energy crisis for households and companies across the Union with the objective 
of  protecting  the  Single  Market  and  preventing  the  risk  of  further  fragmentation. 
Soaring  energy  prices  affect  all  Member  States.  However,  given  the  differences  in 
energy mix, Member States are not all impacted in the same way and do not all have 
the same fiscal space to take the necessary measures to protect vulnerable households 
and  businesses.  In  the  absence  of  a  European  measure  such  as  a  solidarity 
contribution,  there  is  a  high  risk  of  disruption  of  the  Single  Market  and  further 
fragmentation, which would be detrimental to all Member States, given the integration 
of  energy  markets  and  of  value  chains.  Tackling  energy  poverty  and  addressing  the 
social consequences of the crisis, in particular to protect workers in exposed industries, 
are also a matter of solidarity between Member States in the Union. To maximise its 
impact,  the  use  of  the  proceeds  of  the  solidarity  contribution  should  be  done  in  a 
coordinated way and/or via EU financing instruments in a spirit of solidarity.  

(51) 

In  particular,  Member  States  should  target  financial  support  measures  to  the  most 
vulnerable  households  and  companies,  which  are  most  affected  from  the  soaring 
energy prices.  This  would preserve the price incentive to  reduce energy demand and 
save  energy.  In  addition,  targeting  most  vulnerable  and  liquidity-constrained 
households  would  have  a  positive  effect  on  overall  consumption  (by  averting 
excessive  crowding  out  of  spending  on  non-energy  goods)  given  the  high-income 
propensity  to  consume  for  this  group  of  households.  Moreover,  proceeds  should  be 
used  for  fostering  the  reduction  of  energy  consumption.  In  this  respect,  proceeds 
should be used, for instance, for the purpose of  demand reduction auctions or tender 
schemes,  lowering  the  energy  purchase  costs  of  final  energy  customers  for  certain 
volumes  of  consumption,  or  promoting  investments  by  final  energy  customers,  both 
vulnerable households and companies, into renewables, energy efficiency investments 
or  other  decarbonisation  technologies.  Proceeds  of  the  solidarity  contribution  should 
also be used for supporting financially companies in energy intensive industries, and 
in  regions  relying  on  these  industries.Costs  in  energy  intensive  industries  due  to 
soaring energy price developments are skyrocketing, such as in the fertiliser industry. 
Financial  support  measures  are  to  be  made  conditional  upon  investments  into 
renewable  energies,  energy  efficiency,  or  other  decarbonisation 
technologies. 
Furthermore, measures which help making the Union more autonomous in the energy 
field should be supported with investments in accordance with the objectives set forth 
in  the  REPowerEU  Communication,  notably  for  projects  with  a  cross-border 
dimension. 

(52)  Member  States  could  also  decide  to  assign  part  of  the  proceeds  of  the  solidarity 
contribution  to  the  common  financing  of  measures  that  are  intended  to  reduce  the 
harmful effects of the energy crisis, including support for protecting employment and 
the re- and upskilling of the workforce, or to promote investments in energy efficiency 
and  renewable  energy,  including  in  cross-border  projects.  The  common  financing 
aspect covers both project-based cost-sharing between Member States and channelling 
via an EU instrument on the basis of Member States voluntarily assigning revenues to 
the EU budget in a spirit of solidarity. 

(53)  Regular and effective monitoring and reporting to the Commission are essential for the 
assessment of progress made by the Member States in the achievement of the demand 
reduction  targets,  the  implementation  of  the  cap  on  revenues,  the  use  of  the  surplus 
revenues, and the application of regulated prices.  

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(54)  Member  States  should  report  to  the  Commission  on  the  application  of  the  solidarity 
contribution in their respective territories, as well as on any amendments they make to 
such contribution.  

(55)  Member States should also report on the use of the proceeds arising from the solidarity 
contribution. In particular, this is to ensure that Member States use the proceeds in line 
with the usage provided for in this Regulation. 

(56)  The  solidarity  contribution  and  the  EU  legal  framework  governing  it  should  be  of  a 
temporary nature to  address the exceptional and urgent situation that has emerged in 
the Union with respect to the soaring energy prices. The solidarity contribution should 
be  applicable  to  cover  surplus  profits  generated  in  2022  to  address  and  mitigate  the 
harmful effects of the current ongoing energy crisis for households and companies The 
application of the solidarity contribution  to  the full tax  year will allow to  use excess 
profits for the relevant period, in the public interest of mitigating the consequences of 
the  energy  crises,  while  leaving  an  appropriate  measure  of  profits  to  the  companies 
concerned.  

(57)  The solidarity contribution should apply only to  the fiscal  year 2022. By 15 October 
2023,  when  national  authorities  have  a  view  on  the  collection  of  solidarity 
contribution,  the  Commission  will  review  the  situation  and  present  a  report  to  the 
Council. 

(58)  Should  a  Member  State  experience  difficulties  in  the  application  of  the  Regulation 
and,  in  particular,  of  the  temporary  solidarity  contribution,  it  should  consult,  where 
appropriate, the European Commission in line with article 4 of the Treaty on European 
Union. 

(59)  The volatility in underlying  gas prices is  creating difficulties for energy  firms  active 
on  electricity  futures  markets,  in  particular  in  accessing  suitable  collateral.  The 
European Commission, in cooperation with the European Securities Markets Authority 
and  the  European  Banking  Authority,  is  assessing  issues  related  to  the  eligibility  of 
collateral and margins, and possible ways to limit excessive intra-day volatility. 

(60)  Moreover, the measures in this Regulation are consistent with the complementary and 
ongoing  work  of  the  European  Commission  concerning  the  long-term  market  design 
as announced in the Communication on Short-Term Energy Market Interventions and 
Long-Term Improvements to the Electricity Market Design that was issued alongside 
the Repower EU Plan of 18 May 2022. 

(61)  Considering  the  scale  of  the  energy  crisis,  the  level  of  its  social,  economic  and 
financial impact and the need to act as soon as possible, this Regulation should enter 
into  force  as  a  matter  of  urgency  on  the  day  following  that  of  its  publication  in  the 
Official Journal of the European Union. 

(62)  Given the exceptional nature of the measures set out in this Regulation, and the need 
to  apply  them  in  particular  during  the  winter  season  2022-23,  the  Regulation  should 
apply for a period of one year after its entry into force.  

(63)  Since the objectives of this Regulation cannot be sufficiently achieved by the Member 
States,  but  can  rather  be  better  achieved  at  Union  level,  the  Union  may  adopt 
measures, in accordance with the principle of subsidiarity as set out in Article 5 of the 
Treaty on European Union. In accordance with the principle of proportionality, as set 
out  in  that  Article,  this  Regulation  does  not  go  beyond  what  is  necessary  to  achieve 
that objective. 

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HAS ADOPTED THIS REGULATION: 

CHAPTER I 

SUBJECT MATTER AND DEFINITIONS 

Article 1 

Subject matter  

This Regulation establishes an emergency intervention to mitigate the effects of high energy 
prices  via  exceptional,  targeted  and  time-limited  measures.  These  measures  aim  to  reduce 
electricity  consumption,  to  cap  the  market  revenues  that  certain  producers  receive  from  the 
generation  of  electricity  and  redistribute  them  to  final  customers  in  a  targeted  manner,  to 
enable  Member  States  to  apply  public  interventions  in  the  price  setting  for  the  supply  of 
electricity for households and small and medium-sized enterprises, and to establish rules for a 
temporary  solidarity  contribution  for  EU  companies  and  permanent  establishments  with 
activities  predominantly  in  the  oil,  gas,  coal  and  refinery  sectors  to  contribute  to  the 
affordability of energy for households and companies. 

Article 2 

Definitions 

For the purposes  of this Regulation,  the definitions in  Article 2 of Directive (EU) 2019/944 
and Article 2 of Regulation (EU) 2019/943 apply. In addition, the following definitions also 
apply: 

(1) 

(2) 

(3) 

(4) 

(5) 

‘small and medium-sized enterprise’ means an enterprise as defined in  Article 2 of 
the Annex to Commission Recommendation 2003/361/EC12; 

‘gross  electricity  consumption’  means  overall  supply  of  electricity  for  activities  in 
the territory of a Member State;  

‘reference  period’  means  the  period  from  1  November  to  31  March  in  the  five 
consecutive  years preceding the date of entry into force of this Regulation, starting 
with the period from 1 November 2017 to 31 March 2018; 

‘peak  price  hours’  means  hours  of  the  day  where  day-ahead  wholesale  electricity 
prices  are  expected  to  be  the  highest,  based  on  forecasts  by  transmission  system 
operators and nominated electricity market operators; 

‘market revenue’ means realised income a producer receives in exchange for the sale 
and delivery of electricity in the Union, regardless of the contractual form in which 
such exchange takes place, including power purchase agreements and other hedging 
operations against fluctuations in the wholesale electricity market and excluding any 
support granted by the State; 

12 

Commission Recommendation 2003/361/EC  of 6 May 2003 concerning the definition of micro, small 
and medium-sized enterprises (OJ L 124, 20.05.2003, p. 36). 

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(6) 

(7) 

(8) 

(9) 

(10) 

(11) 

(12) 

(13) 

(14) 

(15) 

(16) 

(17) 

(18) 

(19) 

(20) 

(21) 

‘settlement’  means  a  payment  that  is  made  and  received  between  counterparties, 
against  delivery  and  receipt  of  electricity  where  applicable,  in  fulfilment  of  the 
counterparties’ respective obligations pursuant to one or more clearing transactions; 

‘competent  authority’  means  an  authority  as  defined  in  Article  2(11)  of  Regulation 
(EU) 2019/941; 

‘surplus  revenues’  means  a  positive  difference  between  the  market  revenues  of 
producers per MWh of electricity and the cap of 180 Euros per MWh of electricity; 

‘waste’  means  any  substance  or  object  which  the  holder  discards  or  intends  or  is 
required to discard as defined in Article 3 (1) of Directive 2008/98/EC;  

‘net  imports  of  electricity’  means,  for  the  period  between  1  January  2021  and  31 
December  2021,  the  difference  between  the  total  electricity  imports  and  total 
electricity  exports  divided  by  the  total  gross  production  of  electricity  in  a  Member 
State;  

‘fiscal  year’ means a tax year, calendar year or any other appropriate period for tax 
purposes as defined in national law; 

‘customer’ means a wholesale or final customer; 

‘final energy customer’ means a customer who purchases energy for own use;  

‘final electricity customer’ means a customer who purchases electricity for own use; 

‘support  scheme’  means,  any  instrument,  scheme  or  mechanism  applied  by  a 
Member State, or a  group of Member States, that  promotes the use of energy from 
renewable sources; 

‘guarantee  of  origin’  means  an  electronic  document  providing  evidence  to  a  final 
customer  that  a  given  share  or  quantity  of  energy  was  produced  from  renewable 
sources; 

‘activities  in  the  field  of  oil,  gas,  coal  and  refinery  sectors’  means  any  economic 
activity performed by an EU company or permanent establishment generating at least 
75%  of  turnover  in  the  field  of  the  extraction,  mining,  refining  of  petroleum  or 
manufacture of coke oven products;  

‘EU company” means a company of a Member State which according to the tax laws 
of  that  Member  State  is  considered  to  be  resident  in  that  Member  State  for  tax 
purposes and, under the terms of a double taxation agreement concluded with a third 
State, is not considered to be resident for tax purposes outside the Union; 

‘permanent  establishment’  means  a  fixed  place  of  business  situated  in  a  Member 
State through which the business of a company of another State is wholly or partly 
carried on in  so  far as the profits of that place  of business  are subject  to tax in  the 
Member State in which it is situated by virtue of the relevant bilateral tax treaty or, in 
the absence of such a treaty, by virtue of national law; 

‘surplus profits’ means taxable profits accrued from activities carried out at the level 
of companies or permanent establishments in the field of oil, gas, coal and refinery 
sector above a 20% increase of the average of profits of the previous three tax years; 

'solidarity  contribution’  means  a  temporary  measure  intended  to  address  surplus 
profits of EU companies and permanent establishments with activities in the field of 
oil, gas, coal  and refinery sectors to mitigate exceptional price developments in the 
energy markets for Member States, consumers and companies. 

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CHAPTER II 

MEASURES CONCERNING THE ELECTRICITY MARKET 

Section 1 

Demand Reduction 

Article 3 

Reduction of gross electricity consumption 

Member  States  should  seek  to  implement  measures  to  reduce  their  total  monthly  gross 

electricity consumption by 10% compared to the average of gross electricity consumption in 

the corresponding months of the reference period. 

1. 

2. 

1. 

Article 4 

Reduction of gross electricity consumption during peak price hours 

For every month, each Member State shall identify peak price hours corresponding to 
a minimum of 10% of all hours of the month. 

Each  Member  State  shall  reduce  its  gross  electricity  consumption  during  the 
identified  peak  price  hours.  For  every  month,  the  reduction  achieved  over  the 
identified peak price hours shall reach at least 5% on average per hour. The reduction 
target  shall  be  calculated  as  the  difference  between  the  actual  gross  electricity 
consumption for the identified peak price hours and the gross electricity consumption 
forecasted  by  the  transmission  system  operators,  without  taking  into  account  the 
effect of the measures put in place to reach the target set out in this Article. 

Article 5 

Measures to achieve the demand reduction  

Member  States  may  choose  the  appropriate  measures  to  reduce  gross  electricity 
consumption to meet the targets set in Articles 3 and 4. The measures shall be clearly 
defined,  transparent,  proportionate,  non-discriminatory  and  verifiable  and  shall,  in 
particular: 

(a) 

be market-based, with compensation, where applicable established through an 
open  competitive  process,  including  tenders  in  which  successful  bidders 
receive compensation; 

(b)  only  involve  financial  compensation  when  such  compensation  is  paid  for 
additional electricity not consumed compared to  the expected consumption in 
the hour concerned without the tender; 

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(c) 

not unduly distort competition or the proper functioning of the internal market 
in electricity;   

(d)  not  be  unduly  limited  to  specific  customers  or  customer  groups,  including 
aggregators, in accordance with Article 17 of Directive (EU) 2019/944;  

(e) 

not  unduly  prevent  the  process  of  replacing  fossil  fuel  technologies  with 
technologies using electricity. 

Cap on market revenues and distribution of surplus revenues to final customers 

Section 2 

Article 6 

Mandatory cap on market revenues 

1. 

2. 

3. 

4. 

Market  revenues  of  producers  obtained  from  the  generation  of  electricity  from  the 
sources  referred  to  in  Article  7(1)  shall  be  capped  to  a  maximum  of  180  EUR  per 
MWh of electricity produced.  

Member States shall ensure that the cap targets all the market revenues of producers, 
regardless  of  the  market  timeframe  in  which  the  transaction  takes  place  and  of 
whether the electricity is traded bilaterally or in a centralised marketplace. 

Member States shall decide whether to apply the cap on revenues at the settlement of 
the exchange of energy or thereafter. 

Without  prejudice  to  paragraph  1,  Member  States  may  maintain  or  introduce 
measures  that  further  limit  the  market  revenues  of  producers,  provided  that  these 
measures  are  proportionate  and  non-discriminatory,  do  not  jeopardise  investment 
signals, ensure that the investments costs are covered, do not distort the functioning 
of electricity wholesale markets, and are compatible with Union law.  

Article 7 

Application of the cap on market revenues to electricity producers 

1. 

The obligation in Article 6 shall apply to the market revenues obtained from the sale 
of electricity produced from the following sources: 

(a)  wind energy; 

(b) 

solar energy (solar thermal and solar photovoltaic); 

(c) 

geothermal energy; 

(d)  hydropower without reservoir; 

(e) 

biomass fuel (solid or gaseous biomass fuels), excluding bio-methane; 

(f)  waste; 

(g)  nuclear energy; 

(h) 

lignite;  

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2. 

3. 

1. 

2. 

1. 

2. 

(i) 

crude oil and other oil products. 

The cap provided for in  Article 6(1) shall not apply to demonstration projects or to 
producers whose revenues per MWh of electricity produced are already capped as a 
result of State measures.  

Member States may, notably in cases where the application of the cap provided for in 
Article 6(1) leads to a significant administrative burden, decide that the cap does not 
apply  to  producers  generating  electricity  with  power-generating  facilities  with  an 
installed capacity of maximum 20 kW. 

Article 8 

Incentives for renewables power purchase agreements 

Within  the  framework  of  this  Regulation,  Member  States  shall  swiftly  remove  any 
unjustified  administrative  or  market  barriers  to  renewables  power  purchase 
agreements. They shall take measures to accelerate the uptake of renewables power 
purchase agreements, in particular by small and medium-sized enterprises.   

Member  States  shall  design,  schedule  and  implement  support  schemes  –  and 
guarantees of origin – in such a way that they are compatible with, complement and 
enable renewables power purchase agreements. 

Article 9 

Distribution of the surplus revenues  

Member States shall ensure that all surplus revenues resulting from the application of 
the  cap  on  market  revenues  are  employed  to  finance  measures  in  support  of  final 
electricity  customers  that  mitigate  the  impact  of  high  electricity  prices  on  those 
customers, in a targeted manner. 

The  measures  referred  to  in  paragraph  1  shall  be  clearly  defined,  transparent, 
proportionate,  non-discriminatory  and  verifiable  and  shall  not  counteract  the 
reduction obligation of gross electricity consumption in Articles 3 and 4. 

3. 

The measures referred to in paragraph 1 may for example include: 

(a) 

granting  a  financial  compensation  to  final  electricity  customers  for  reducing 
their electricity consumption, including through demand reduction auctions or 
tender schemes; 

(b)  direct transfers to final electricity customers;  

(c) 

(d) 

(e) 

compensation to  suppliers who have to  deliver electricity to customers below 
costs following a State intervention in price setting pursuant to Article 12;  

lowering  the  electricity  purchase  costs  of  final  electricity  customers  for  a 
limited volume of the electricity consumed;   

promoting  investments  by  final  electricity  customers  into  decarbonisation 
technologies, renewables and energy efficiency investments. 

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Article 10 

Agreements between Member States 

In situations where a Member State’s net imports of electricity are equal or higher than 100%, 

an agreement to share the surplus revenues shall be concluded by 1 December 2022 between 

the importing Member State and the main exporting country. All Member States may, in a 

spirit of solidarity, conclude such agreements. 

Section 3 

Retail measures 

Article 11 

Temporary extension to small and medium-sized enterprises of public interventions in 
electricity price setting  

By way derogation from the EU rules on public interventions in price setting, Member States 

may apply public interventions in price setting for the supply of electricity to small and 

medium-sized enterprises. Such public interventions shall: 

(a) 

(b) 

be limited to 80% of the beneficiary's highest annual consumption over the last 
5 years and retain an incentive for demand reduction;  

 comply  with  the  conditions  of  Article  5(4)  and  (7)  of  Directive  (EU) 
2019/944;  

(c)  where relevant, comply with the conditions of Article 12 of this Regulation.   

Article 12 

Temporary possibility to set electricity prices below cost  

By way of derogation from the EU rules on public interventions in price setting, when 

applying public interventions in the price setting for the supply of electricity pursuant to 

Article 5(6) of Directive (EU) 2019/944 or Article 11 of this Regulation, Member States may 

exceptionally and temporarily set a price for the supply of electricity which is below cost 

provided that all of the following conditions are fulfilled:   

(a)  The measure covers a limited amount of consumption and retains an incentive 

for demand reduction; 

(b)  There is no discrimination between suppliers; 

(c)  Suppliers are compensated for supplying below cost; 

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(d)  All  suppliers  are  eligible  to  provide  offers  at  the  regulated  price  on  the  same 

basis.  

MEASURE CONCERNING THE OIL, COAL, GAS AND REFINERY SECTORS 

CHAPTER III 

Article 13 

Support to final customers through a mandatory temporary solidarity contribution 

Surplus profits generated from activities in the oil, gas, coal and refinery sector shall 
be subject to a temporary solidarity contribution. 

Member  States  shall  ensure  that  existing  or  planned  national  measures  sharing 
similar  objectives  as  the  temporary  solidarity  contribution  under  this  Regulation 
comply  with  or  complement 
temporary  solidarity 
contribution set by this Regulation. 

the  rules  governing 

the 

The  mandatory  temporary  solidarity  contribution  referred  to  in  paragraph  1  shall 
apply from 31 December 2022 at the latest. 

1. 

2. 

3. 

Article 14 

Base for calculating the temporary solidarity contribution 

The  temporary  solidarity  contribution  for  EU  companies  and  permanent  establishments 

performing activities in  the field  of oil, gas, coal and refinery sectors shall  be calculated on 

the taxable profits, as determined under national tax rules in the fiscal year starting on or after 

1 January 2022, which are above a 20% increase of the average taxable profits, as determined 

under  national  tax  rules,  of  the  three  fiscal  years  starting  on  or  after  1  January  2019.  If  the 

average  annual  result  from  the  period  covering  the  three  fiscal  years  starting  on  or  after  1 

January  2019  is  negative,  the  average  taxable  profits  shall  be  zero  for  the  purpose  of 

calculating the temporary solidarity contribution. 

Article 15 

Rate for calculating the temporary solidarity contribution 

1. 

2. 

The  rate  applicable  for  calculating  the  temporary  solidarity  contribution  shall  be  at 
least 33% of the base referred to in Article 14. 

The temporary solidarity contribution shall apply in addition to the regular taxes and 
levies applicable according to the national legislation of a Member State. 

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Article 16 

Use of proceeds from the temporary solidarity contribution  

1. 

Member States shall use the proceeds from the temporary solidarity contribution with 
sufficiently timely impact for the following purposes: 

(a) 

(b) 

(c) 

(d) 

(e) 

financial  support  measures  to  final  energy  customers,  and  notably  vulnerable 
households, to mitigate the effects of high energy prices, in a targeted manner; 

financial  support  measures  to  help  reducing  the  energy  consumption  such  as 
through  demand  reduction  auctions  or  tender  schemes,  lowering  the  energy 
purchase costs of final energy customers for certain volumes of consumption, 
promoting  investments  by  final  energy  customers  into  renewables,  structural 
energy efficiency investments or other decarbonisation technologies;  

financial support measures to support companies in energy intensive industries 
provided  that  they  are  made  conditional  upon  investments  into  renewable 
energies, energy efficiency or other decarbonisation technologies. 

financial  support  measures  to  develop  the  energy  autonomy  in  particular 
investments in line with REPowerEU objectives notably projects with a cross-
border dimension. 

in a spirit of solidarity, between Member States,  assignment by Member States 
of  a  share  of  the  proceeds  of  the  temporary  solidarity  contribution  to  the 
common  financing  of  measures  to  reduce  the  harmful  effects  of  the  energy 
crisis  including  support  for  protecting  employment  and  the  re-  and  upskilling 
of the workforce or to promote investments in energy efficiency and renewable 
energy including in cross-border projects.  

2. 

The  measures  referred  to  in  paragraph  1  shall  be  clearly  defined,  transparent, 
proportionate, non-discriminatory and verifiable. 

Article 17 

Temporary nature of the solidarity contribution  

The  temporary  solidarity  contribution  applied  by  Member  States  in  accordance  with  this 

Regulation shall be of a temporary nature.  It shall only apply to surplus profits generated in 

the fiscal year that started on or after 1 January 2022. 

CHAPTER IV 

FINAL PROVISIONS 

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Article 18 

Monitoring and enforcement 

1. 

2. 

3. 

The competent authority of each Member State shall monitor the implementation of 
the measures referred to in Articles 3, 4, 5, 6, 7, 9, 11 and 12 on its territory.  

As soon as possible after the entry into force of this Regulation and at the latest by 1 
December  2022,  Member  States  shall  report  to  the  Commission  the  planned 
measures  required  pursuant  to  Article  5  and  the  agreements  concluded  pursuant  to 
Article 10. 

By 15 January 2023 and every month thereafter until 15 April 2023, Member States 
shall report to the Commission on: 

(a) 

the demand reduction achieved pursuant to Articles 3 and 4 and the measures 
put in place to achieve the reduction pursuant to Article 5;  

(b) 

the surplus revenues generated pursuant to Article 6;  

(c) 

the  measures  concerning  the  distribution  of  the  surplus  revenues  applied  to 
mitigate  the  impact  of  high  electricity  prices  on  final  customers  pursuant  to 
Article 9; 

(d) 

any public interventions in price setting for electricity referred to in Articles 11 
and 12; 

4. 

Member States shall report to the Commission on:  

(a) 

(b) 

(c) 

the introduction of the temporary solidarity contribution pursuant to Article 13 
by 15 October 2022; 

any  subsequent  amendments  to  said  measure  within  one  month  of  the 
publication in the national official journal;  

on  the  use  of  the  proceeds  pursuant  to  Article  16  within  one  month  from  the 
moment  the  proceeds  have  been  collected  by  Member  States  in  accordance 
with national law.  

Article 19 

Review  

1. 

2. 

By 28 February 2023, the Commission shall carry out a review of Chapter II in view 
of the  general  situation of electricity supply and electricity prices in  the  Union and 
present  a  report  on  the  main  findings  of  that  review  to  the  Council.  Based  on  that 
report,  the  Commission  may  in  particular  propose,  in  case  this  is  justified  by  the 
economic circumstances or the functioning of the electricity market in the Union and 
individual Member States, to prolong the period of application of this Regulation, to 
amend the level of the revenue cap in Article 6 (1) and its application to producers in 
Article 7 or otherwise amend Chapter II.  

By 15 October 2023, the Commission shall carry out a review of Chapter III in view 
of  the  general  situation  of  the  fossil  fuel  sector  and  surplus  profits  generated  and 
present a report on the main findings of that review to the Council.  

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Article 20 

Entry into force and application 

1. 

2. 

This Regulation shall enter into force on the day following that of its publication in 
the Official Journal of the European Union. 

Without  prejudice  to  the  need  to  ensure  the  distribution  of  surplus  revenues  in 
accordance  with  Article  9,  and  to  use  proceeds  from  the  temporary  solidarity 
contribution in accordance with Article 16, this Regulation shall apply for a period of 
one year from its entry into force. 

Articles 3, 4, 5, 6, 7, 9, 10 shall apply as of 1 December 2022. This shall be without 
prejudice to an earlier voluntary application by Member States.  

Articles 3, 4, 6, 7, shall apply until 31 March 2023.  

This Regulation shall be binding in its entirety and directly applicable in the Member States in 
accordance with the Treaties. 

Done at Brussels, 

For the Council 
The President 

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