REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the review of emergency interventions to address high energy prices in accordance with Council Regulation (EU) 2022/1854
Date: 2023-06-05
Institutions: Directorate-General for Energy, European Commission
Subjects: EU Member State, EU energy policy, consumer protection, electrical energy, energy consumption, energy crisis, energy efficiency, energy saving, price of energy, retail price, security of supply

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 5.6.2023  COM(2023) 302 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the review of emergency interventions to address high energy prices in accordance with  Council Regulation (EU) 2022/1854  
 
 
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

on the review of emergency interventions to address high energy prices in accordance 
with  Council Regulation (EU) 2022/1854 

Contents 

I. 

Introduction ..................................................................................................................................... 2 

II.  Requirement in Article 20 of Council Regulation ........................................................................... 5 

III.   Current electricity market conditions .............................................................................................. 6 

IV.   Electricity Demand Reduction ........................................................................................................ 7 

V. 

Inframarginal revenue cap ............................................................................................................. 10 

VI.   Support for final consumers .......................................................................................................... 14 

VII.  Preliminary conclusions ................................................................................................................ 17 

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I. 

Introduction 

This report reviews the provisions under Chapter II of Regulation 2022/1854 pursuant to Article 

20(1) of that Regulation (the Council Regulation).1 It is based on the information provided by 

25 Member States pursuant to Article 19 of the Council Regulation. The report also draws on 

the answers to some of the questions posed by the European Commission (the Commission) in 

its public consultation for its proposal on the reform of electricity market design. 

The Council Regulation  was one of the measures through which the  Union responded to an 

energy crisis which developed over the last two years when energy prices were significantly 

higher than in recent decades. Prices started rising rapidly in summer of 2021 when the world 

economy  picked  up  after  COVID-19  restrictions  were  eased.  Subsequently,  Russia’s 

weaponisation  of  energy  sources  in  spot  markets  and  the  invasion  of  Ukraine  have  led  to 

substantially  lower  levels  of  gas  delivery  and  increased  disruptions  of  gas  supply,  further 

driving up the gas prices. High gas prices have a significant influence on the price of electricity 

as gas-fired power plants are often needed to satisfy electricity demand. 

The Commission has been fully engaged since the beginning of the energy crisis to mitigate the 

effects  of  high-energy  prices  on  European  citizens  and  companies,  and  quickly  developed, 

closely with Member States, a series of policy responses.   

In October 2021, the EU provided an energy prices toolbox with measures to address high prices 

and their impact on consumers (including income support, tax breaks, gas saving and storage 

measures).2 This, in the context of the weaponisation of gas supply and Russia’s manipulation 

of energy markets through intentional disruptions of gas flows which led to increasing concerns 

of possible shortages that resulted in an unprecedented rise in energy prices.  

Following  the  Russian  invasion  of  Ukraine  in  February  2022,  the  EU  responded  with  a 

Communication  in  March  outlining  the  principles  of  the  REPowerEU  plan3  that  was 

subsequently developed in detail on 18 May 20224 – a plan for the EU to end its dependence 

on Russian fossil fuels at the latest by 2027 through three pillars: diversifying energy sources 

away  from  Russian  fossil  fuels,  saving  energy  and  accelerating  the  energy  transition.  With 

respect to  this last  pillar, the Commission  proposed to  increase the headline 2030 target  for 

1 Council Regulation (EU) 2022/1854 on an emergency intervention to address high energy prices. 
2  Communication  from  the  Commission  to  the  European  Parliament,  the  European  Council,  the  Council,  the 
European Economic and Social Committee and the Committee of the Regions - Tackling rising energy prices: a 
toolbox for action and support, COM(2021) 660 final. 
3REPowerEU: Joint European Action for more affordable, secure and sustainable energy, COM(2022) 108 final. 
4 REPowerEU Plan, COM/2022/230 final. 

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renewables from 40% to 45% and that of energy efficiency from 9% to 13% under the “fit for 

55”  package.  Faster  deployment  of  renewables,  greater  energy  efficiency  and  further 

electrification of demand are necessary to protect European citizens against fossil-related crises 

as they will immediately and structurally reduce demand for fossil fuels and contribute to the 

decarbonisation objectives in the power, heating and cooling industries and transport sectors. 

Due to their low operational costs, renewables should have positive impact on energy prices 

across the EU. Furthermore, the faster deployment of renewable energy coupled with greater 

energy efficiency  will contribute to security of  energy supply by  phasing-out fossil fuels on 

which the EU has been highly dependent. Alongside the REPowerEU plan, the Communication 

on  Short-Term  Energy  Market  Interventions5,  in  addition  to  setting  out  further  short-term 

measures to tackle high energy prices, identified potential areas for improving the electricity 

market  design  and  announced  the  intention  to  assess  these  areas  with  a  view  to  change  the 

relevant legislative framework.  

On 6 October 2022, the Council adopted the Council Regulation which  introduced exceptional, 

targeted and time-limited common measures to reduce electricity demand and to collect and 

redistribute  the  energy  sector's  exceptionally  high  revenues  to  final  customers.  More 

specifically, the measures intervening in the electricity market can be summarised as follows 

(Chapter II of the Council Regulation): 

  Electricity  demand  reduction:  The  Council  Regulation  sets  out  two  targets,  one 

indicative (cutting overall electricity demand by 10 %) and one mandatory (reducing 

demand, during hours of high electricity demand, by at least 5 %). Member States were 

free  to  choose  the  appropriate  measures,  respecting  some  conditions  set  out  in  the 

Council Regulation.6 The mandatory target applied from 1 December 2022 to 31 March 

2023.7 

 

Introduction  of  a  temporary  revenue  cap  on  ‘inframarginal’  power  producers  (e.g., 

renewables, nuclear and lignite): The Council Regulation mandates the introduction of 

a  temporary  revenue  cap  of  maximum  €180/MWh  on  electricity  producers  using 

technologies  with  lower  marginal  costs  (the  revenue  cap).  However,  it  also  gives 

flexibility to Member States in deciding how to apply this measure at national level. 

Revenues above the revenue cap will be used to mitigate the impact of high electricity 

5 Communication  from the Commission to the European Parliament,  the Council, the European Economic and 
Social Committee and the Committee of the Regions - Short-Term Energy Market Interventions and Long Term 
Improvements to the Electricity Market Design – a course for action, COM(2022) 236 final. 
6 In so far as State resources are involved, such measures may be subject to State Aid control. 
7 The measure which introduced the indicative target continues to apply until the end of December 2023.  

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prices on energy consumers. The measure applies from 1 December 2022 to 30 June 

2023.  

  Support for final customers: The Council Regulation expands the Toolbox available for 

Member States  to shield  electricity  consumers, by  allowing for below cost  regulated 

prices  for  households  and  small  and  medium-sized  enterprises  (SMEs)  under  certain 

conditions.  This measure applied from 8 October 2022 until 31 December 2023. 

The  Council  Regulation  also  introduced  a  solidarity  contribution  for  EU  companies  and 

permanent establishments with activities in the crude petroleum, natural gas, coal and refinery 

sectors (Chapter III). 

While the Council Regulation aimed to address the exceptional circumstances of the energy 

crisis, on 14 March 2023, the Commission moved beyond a purely emergency response and 

proposed  a  reform  to  the  EU's  electricity  market  design  to  accelerate  the  deployment  of 

renewables and the phase-out of gas, make consumer bills less dependent on volatile fossil fuel 

prices, better protect consumers from future price spikes and potential market manipulation, 

and  make  the  EU's  industry  clean  and  more  competitive  (the  electricity  market  design 

proposal).8 This proposal sets out measures that aim to enable the development of longer term 

contracts with non-fossil power production and to bring more clean flexible solutions into the 

system, such as demand response and storage, to push out gas from the electricity mix. More 

specifically, to improve the flexibility of the power system, the proposal sets a requirement on 

Member States to assess their needs and establish objectives to increase non-fossil flexibility 

and sets out the possibility to introduce new support schemes for non-fossil flexibility such as 

demand response and storage.  

The electricity market design proposal also includes measures that enhance the protection of 

vulnerable consumers. Among other, the proposal allows Member States to introduce below-

cost regulated retail prices to households and SMEs in case of a future electricity price crisis.  

In  preparation  of  the  proposal,  the  Commission  conducted  a  public  consultation  from  23 

January 2023 to 13 February 2023 (the public consultation). The public consultation included 

questions on the measures introduced in the Council Regulation.9  

8 Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) 2019/943 
and (EU) 2019/942 as well as Directives (EU) 2018/2001 and (EU) 2019/944 to improve the Union’s electricity 
market design. 
9  The  Commission  received  1369  replies;  more  than  700  of  those  have  come  from  citizens,  around  450  from 
businesses and business associations, around 40 from national or local administrations or from national regulators 
and around 70 from network operators. Also, around 20 energy communities, 15 trade unions and 20 consumers 

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II.  Requirement in Article 20 of Council Regulation  

Article  19  of  the  Council  Regulation  introduced  reporting  obligations  on  Member  States 

according  to  which,  by  31  January  2023,  Member  States  should  have  submitted  to  the 

Commission information on (i) the implemented demand reduction measures; (ii) the surplus 

revenues generated following the introduction of the temporary revenue cap on ‘inframarginal’ 

power producers as well as the distribution of such revenues to  mitigate  the impact  of high 

electricity prices; and (iii) any retail price setting interventions. Not all Member States have 

submitted their reports as required. Less than half Member States submitted their reports by the 

deadline, others made submissions in February and March 2023 and two have not yet submitted 

their reports to the Commission.10 This report relies on the information submitted by Member 

States at the time of writing. It should be noted though that the Commission has not carried out 

any assessment as regards the accuracy of the information submitted. 

Pursuant to Article 20(1) of the Council Regulation, the Commission shall carry out a review 

of Chapter  II in  view of the general  situation  of electricity supply and prices in  the EU and 

submit a report on the main findings of that review to the Council.  

Article 20(1) of the Council Regulation also provides that, based on that report, the Commission 

may  propose,  if  this  is  justified  by  the  economic  circumstances  or  the  functioning  of  the 

electricity market in the EU and individual Member States, to extend the period of application 

of  the  Council  Regulation,  to  amend  the  level  of  the  revenue  cap  on  ‘inframarginal’  power 

producers  and  the  sources  of  electricity  generation  to  which  it  is  currently  applicable,  or  to 

otherwise amend Chapter II. 

As part of the review of the Council Regulation measures in Chapter II and in line with Article 

20(1), the Commission submits this report to the Council (the Report). The Report thus does 

not  cover  a  review  of  the  solidarity  contribution  provisions  contained  in  Chapter  III  of  the 

Council Regulation, a report on which will be submitted separately in line with Article 20(2) of 

that Regulation.  

The Report is based on the Commission’s review pursued at the time of writing based on current 

electricity market conditions, their expected evolution at the time of writing and other available 

information,  including  the  responses  from  25  Member  States  that  fulfilled  their  reporting 

obligations according to Article 19 of the Council Regulation (the reporting Member States). 

organisations  participated.  A  significant  number  of  NGOs,  think  tanks  and  research  or  other  academic 
organisations submitted responses as well. 
10 Hungary and Romania. 

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The Report is therefore without prejudice to any unforeseen changes of the general situation of 

electricity  supply  and  prices  in  the  EU  or  possible  future  conclusions  based  on  additional 

information from Member States.  

III.  Current electricity market conditions  

The measures in the Council Regulation were introduced in a period where electricity prices 

had reached record high levels. For example, in August 2022, wholesale electricity prices of 

the main EU electricity markets were in excess of 350 EUR/MWh, while in December 2022 

the benchmark was above 220 EUR/MWh.  The electricity prices during the  reported period 

were  approximately  four  times  higher  than  the  average  price  between  2010-2020  (40-60 

EUR/MWh). These excessive prices were mostly attributable to the fact that gas prices reached 

new highs during summer 202211 and continued to be at high levels during most of autumn, and 

that during this period  gas and coal-fired generation facilities were often the plants with the 

highest marginal costs that were needed to meet the demand for electricity. Spot wholesale gas 

prices during the crisis rose around six times the average price between 2010-2020 (around 20 

EUR/MWh).  It  was  against  this  backdrop  that  the  Council  adopted,  in  October  2022,  the 

Commission’s  proposal  for  an  emergency  intervention  in  the  electricity  market  eventually 

leading  to  the  adoption  of  the  Council  Regulation.  The  Commission’s  and  the  Council’s 

expectation at the time was that electricity prices would continue to range at high levels as those 

observed in summer and autumn 2022.  

However,  since  December  2022,  when  the  measures  in  the  Council  Regulation  became 

applicable, electricity prices have drastically decreased,  with current average prices  being at 

levels of less than 80 EUR/MWh (the EU benchmark average stands at 80 EUR/MWh up to 

end of May 2023).  

This is mainly due to decreased wholesale gas prices, which were linked to various factors, such 

as  mild  weather  conditions  and  the  wide  set  of  measures  that  the  Member  States  and  the 

Commission put in place to fight the energy crisis, including the electricity demand reduction 

11 In August 2022, TTF day-ahead and month-ahead prices were above 230 EUR/MWh. 

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measures  in  the  Council  Regulation,  the  LNG  benchmark  and  the  gas  demand  reduction 

measures,12 which all together improved the underlying supply-demand balance. 13  

The recent fall and stabilisation of gas prices, and consequently, electricity prices during the 

first months of 2023 have led to market expectations that the electricity price spikes observed 

throughout 2022 are less probable to occur in the upcoming winter.  Such market expectations 

are underpinned by various factors, such as the higher gas storage levels, the Member States’ 

demand  reduction  efforts  and  consequent  results  and  the  additional  pipeline  and  liquified 

natural  gas infrastructure that has been constructed with a view to  combat the energy crisis. 

Other  inherent  factors  of  the  electricity  market  supply,  such  as  the  expected  improved 

availability of nuclear power and overall higher availability of hydro power compared to 2022 

also point to less costly supply conditions for electricity in the upcoming winter, expected to 

result in lower upward pressure on electricity prices compared to those in 2022.  

IV.  Electricity Demand Reduction  

Demand reduction measures  

All  reporting Members  States  have implemented energy  saving  and consumption  awareness 

campaigns as well as general energy saving measures such as action on public building heating 

and  public  lighting.  The  Commission  welcomes  these  campaigns  as  they  make  consumers 

aware of when electricity prices are high so that they can make their energy consumption more 

flexible. In order to encourage demand response, five Member States, namely Austria, Croatia, 

Czechia, Greece and Poland have reported that that they have introduced subsidies on retail 

energy prices that are only applicable to specific electricity consumption levels.  

19  Member  States,  namely  Austria,  Bulgaria,  Croatia,  Czechia,  Estonia,  Finland,  France, 

Greece,  Ireland,  Italy,  Latvia,  Lithuania,  Luxemburg,  the  Netherlands,  Poland,  Portugal, 

Slovenia, Spain and Sweden have put in place specific measures aiming at achieving electricity 

demand reduction at peak hours, such as publication of peak hours, communication campaigns 

and  individual  messaging  to  consumers  encouraging  voluntary  electricity  reductions.    More 

12 Council Regulation (EU) 2022/2576 of 19 December 2022 enhancing solidarity through better coordination of 
gas purchases, reliable price benchmarks and exchanges of gas across borders, Council Regulation (EU) 2022/1369 
of 5 August 2022 on coordinated demand-reduction measures for gas and Council Regulation (EU) 2023/706 of 
30  March  2023  amending  Regulation  (EU)  2022/1369  as  regards  prolonging  the  demand-reduction  period  for 
demand-reduction measures for gas and reinforcing the reporting and monitoring of their implementation.  
13 The EU has reduced its natural gas demand by 19.2% or 41.5 bcm from August 2022 to January 2023, compared 
to the average of the previous five years. It has thus so far exceeded its target of 15%, which would correspond to 
32.5 bcm for the same period. Moreover, it has already achieved more than 90% of its overall target of just over 
45 bcm reduction for the entire period of August 2022 to March 2023. 

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specifically,  Italy,  Slovenia,  and  Spain  have  implemented  competitive  bidding  schemes  to 

reduce electricity demand at peak hours during winter 2022-2023, 14 while Austria and Sweden 

notified  a  relevant  scheme  to  the  Commission  for  approval  within  the  State  aid  framework. 

Finally,  Portugal  reported  that  it  is  in  the  process  of  considering  the  implementation  of  a 

competitive bidding scheme to reduce electricity demand at peak hours.  

Three  Member  States  have  imposed  demand  reduction  measures  on  specific  consumer 

categories.  For  example,  Latvia  has  imposed  limits  on  the  electricity  consumption  of  large 

industrial consumers.  

Reduction of electricity consumption 

Based on the information submitted by the reporting Member States for the month of December 

2022,  the  overall  decrease  of  electricity  consumption  ranged  between  0,5%15  and  15% 

compared to the reference period16.  

With respect to the volumes by which electricity consumption was reduced at peak hours: 

  Ten  Members  States,  namely  Austria,  Bulgaria,  Croatia,  Estonia,  Ireland,  Italy, 

Luxembourg, the Netherlands, Poland and Portugal declared reduced volumes ranging 

between 4% and 7%. 

  Eight Member States, namely Belgium, Czechia, Denmark, Finland, Germany, Latvia, 

Slovenia and Sweden have declared reduced volumes ranging between 7% and 10%. 

  Five Member States, namely France, Greece, Lithuania, Slovakia and Spain declared 

reduced volumes of above 10%.  

Assessment on prolongation of the measure  

Reporting  Member  States  indicate  that  they  overall  reached  the  binding  target  of  reducing 

electricity  consumption by 5%  at  peak hours.  However,  some Member  States  indicated that 

compliance  with  the  indicative  requirement  for  a  10%  reduction  of  the  overall  monthly 

14 Some Member States, namely Italy, Portugal, Slovenia and Spain have introduced or consider introducing a 
competitive bidding process to achieve reduction in electricity demand. 
15  Cyprus,  Croatia,  Poland  and  Portugal  declared  the  lowest  levels  of  reduction  of  electricity  consumption 
achieved. 
16  As  defined  in  Article  2  point  (3)  of  the  Council  Regulation.  Germany,  Finland,  France,  Greece  and  Spain 
reported the highest levels of reduction of electricity consumption achieved.  When calculating the reduction of 
gross electricity consumptions, some reporting Member States appear to have applied Article 3(2) of the Council 
Regulation, while others have not. Article 3(2) gives Member States the possibility to take account of the increased 
gross  electricity  consumption  that  follows  from  reaching  the  gas  demand  reduction  targets  and  general 
electrification  efforts  to  phase  out  fossil  fuels  in  their  respective  calculations  of  reductions  of  gross  electricity 
consumption. As a result, any comparisons of such calculations across various Member States should be carried 
out with caution. 

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consumption (compared to the last 5 years) was challenging because of weather dependency 

and the economic circumstances due to the energy crisis. 

The public consultation included questions on a possible prolongation of the demand response 

measures. In response to those questions, most stakeholders expressed that there is no need to 

introduce in the Electricity Regulation (EU) 2019/943 on the internal market for electricity (the 

Electricity Regulation) specific demand response requirements that would be applicable in case 

of  a  crisis.  Instead,  they  were  of  the  opinion  that  demand  response  is  already  sufficiently 

addressed in the electricity market legislation, as provided for in the provisions of Directive 

(EU)  2019/944  on  common  rules  for  the  internal  market  for  electricity  (the  Electricity 

Directive) and further enhanced in the electricity market design proposal. 

Importantly,  the  electricity  market  design  proposal  further  integrates  demand  reduction 

measures  as  structural  elements  in  the  electricity  market  design.  In  particular,  to  ensure  the 

efficient  integration  of  electricity  generated  from  variable  renewable  energy  sources  (taking 

cross-zonal  exchanges  into  account)  and  to  reduce  the  need  for  fossil-fuel  based  electricity 

generation  in  times  when  there  is  high  demand  for  electricity  combined  with  low  levels  of 

electricity  generation  from  variable  renewable  energy  sources,  the  electricity  market  design 

proposal  enables  transmission  system  operators  to  design  a  peak  shaving  product  enabling 

demand response to  further  contribute to  decreasing peaks of  consumption in  the  electricity 

system at specific hours of the day  (new Article 7a of the Electricity Regulation). The peak 

shaving  product  may  contribute  to  maximising  the  integration  of  electricity  produced  from 

renewable sources into the system by shifting the electricity consumption to moments of the 

day  with  higher  renewable  electricity  generation,  provided  that  the  forecasted  costs  do  not 

exceed the expected benefits of the products. As the peak shaving product aims to reduce and 

shift the electricity consumption, the proposal limits the scope of this product to demand side 

response. 

In addition, the electricity market design proposal calls on Member States to assess their needs 

for power system flexibility, including demand response, and establish objectives to deliver on 

these needs. The proposal also integrates the possibility for Member States to design or redesign 

capacity  mechanisms  to  promote  low  carbon  flexibility  and  to  introduce  new  non-fossil 

flexibility support schemes in the electricity markets. Moreover, contrary to the rationale behind 

the demand reduction measures in the Council Regulation, which aimed at achieving demand 

reduction targets universally across Member States because of the crisis situation, the electricity 

market design proposal tackles demand response more structurally. It enables Member States 

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to design their respective non-fossil flexibility mechanisms and objectives for demand response 

and storage tailored to the specific needs of their respective electricity systems. For this reason, 

the proposal does not set out specific targets.  

The Commission also notes that a new network code on demand response is currently in the 

process of being drafted. Once finalised, this network code is expected to include binding rules 

on  aggregation,  energy  storage  and  demand  curtailment,  which  will  further  facilitate  the 

participation of demand response to all existing markets.17 

Taking  into  consideration  the  information  currently  available  to  the  Commission,  including 

current market expectations as set out above, the Commission does not see a current need to 

prolong the demand reduction measures set out in the Council Regulation.  

V. 

Inframarginal revenue cap  

Implementation of the revenue cap 

Based on the information submitted by the reporting Member States, the implementation of the 

inframarginal revenue cap has been very heterogeneous. Diverse implementation is observed 

not only with respect to the level at which the revenue cap was set (seventeen Member States 

have  set  the  cap  below  the  180  EUR/MWh18),  but  also  regarding  the  temporal  scope  of  the 

measures (seven19 Member States apply the cap retroactively, and eleven20 Member States will 

apply it after the end date set out in the Council Regulation for this measure).   

Several Member States have reported difficulties with the implementation of the measure in 

their national jurisdictions. Most of these difficulties related to the short timeframe within which 

Member  States  had  to  implement  it,  while  others  were  linked  to  the  data  collection  and 

calculation of the revenues of each electricity generator that would be subject to the measure. 

https://www.acer.europa.eu/news-and-events/news/acer-submitted-framework-guideline-demand-response-

17 
european-commission-first-step-towards-binding-eu-rules  
18 The following Member States have reported a cap below 180 EUR/MWh at least for one technology: Austria, 
Belgium,  Bulgaria,  Czech  Republic,  Cyprus,  Finland,  France,  Germany,  Greece,  Ireland,  Italy,  Luxembourg, 
Netherlands,  Poland,  Slovakia.    Spain  introduced  a  market  revenue  cap  on  certain  technologies  already  in 
September 2021. The measure, which is projected to last until the end of 2023, currently applies a cap at around 
67  EUR/MWh.  In  June  2022,  Spain  and  Portugal  implemented  a  mechanism  aimed  at  reducing  the  wholesale 
electricity prices in the Iberian market which reduces the impact of the market revenue cap. The mechanism was 
approved by the Commission on 8 June 2022 under the case numbers SA. 102454 and SA. 102569 and recently 
prolonged until the end of 2023 under the case numbers SA. 106095 and SA. 106096.  
19 The following Member States started to apply the inframarginal revenue cap before 1 December 2022: Belgium 
(1/8/2022); Cyprus (24/6/2022); France (1/7/2022); Greece (8/7/2022); Italy (February 2022 for some renewable 
generators) and Portugal and Spain (June 2022). 
20  In  Austria,  Czech  Republic,  Finland,  France,  Luxembourg,  Poland,  Portugal,  Slovenia  and  Spain  the 
inframarginal revenue cap or similar measures will be applied until 31 December 2023. In Cyprus the end of the 
measure  will be based on a decision issued by the regulator. In Slovakia the measure will be in place until 31 
December 2024. Additionally, in Germany the period of application can be extended until 30 April 2024. 

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Member  States  have  also  reported  conflicts  with  the  relevant  national  tax  authorities  and 

applicable regulations, when discussing ways to implement the revenue cap.  

While Member States did not report major obstacles on cross-border trade or bidding behavior, 

some respondents  to  the public consultation  were concerned that  the patchwork of different 

implementation  strategies  across  Member  States  created  regulatory  uncertainty  for  market 

participants and was perceived as a barrier to new investments. 

Revenues generated from the implementation of the revenue cap 

It is important to keep in mind that Member States submitted their report within a few months 

after the entering into force of the inframarginal revenue cap, and by that time most of them 

still  did  not  have  information  about  the  revenues  collected  through  the  measure.  Only  two 

Member  States  were  able  to  provide  some  preliminary  figures:  Bulgaria  reported  to  have 

collected  BGN  321  700  123  (approximately  EUR  163  million)  in  December  2022,  and 

Lithuania  submitted  that  approximately  EUR  10  million  were  collected  by  9  March  2023. 

Whilst Greece, Spain and Italy were able to provide figures, those referred to revenues collected 

before the adoption of the Council Regulation, as these countries had implemented equivalent 

measures to the revenue cap before the adoption of the Council Regulation.  

Most Member States were able to provide estimates of the revenues they expected to collect, in 

many cases with the caveat that those estimates were based on assumed very high electricity 

wholesale  prices.  Revenues  were  originally  expected  to  exceed  EUR  50  billion  in  total. 

However, those assumptions already seemed unlikely to materialise by the time of the reporting. 

The amount of revenues is distributed unevenly across Member States, with Germany reporting 

the higher estimates it initially expected to collect (EUR 23.4 billion, considering a possible 

extension of the measure until 30 April 2024), followed by France (EUR 11 billion). It should 

be noted that in both countries the revenue cap for most technologies has been set at a level 

much  lower  than  the  180  EUR/MWh  provided  by  the  Council  Regulation,  and  that  these 

estimates  were  based  on  expected  high  wholesale  electricity  prices.  Other  Member  States, 

especially those that did not set the level of the  cap lower than 180 EUR/MWh expected to 

collect lower amounts. 

Assessment on prolongation of the measure 

As a preliminary point, it should be recalled that the rationale behind the inframarginal revenue 

cap  was  to  enable  Member  States  to  collect  and  redistribute  the  excessive  revenues 

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exceptionally  obtained  by  certain  inframarginal  generators  while  preserving  price-based 

competition among electricity producers (in particular, renewables-based) across the EU.   

In this regard, due to the lower wholesale electricity prices during the last months, the revenue 

cap, which was set at a maximum of 180 EUR/MWh21 has so far had relevant effects principally 

in Member States that in accordance with Article 8(1)(a) opted for a cap that is lower than 180 

EUR/MWh  and,  in  particular,  sufficiently  low  to  capture  inframarginal  revenues  from  the 

relevant electricity prices in those Member States.  

As set out above, the revenue cap has been implemented in a very heterogeneous manner across 

Member States. Diverse implementation is observed not only with respect to the level at which 

the revenue cap was set, but also regarding the temporal scope of its application and the cap 

level introduced per technology within a given Member State. In addition, the Commission has 

also been made aware in exchanges with stakeholders and via complaints that the way in which 

certain Member States have decided to implement the revenue cap may have affected existing 

power purchase agreements (PPAs) and other long-term contracts as well as disincentivised the 

conclusion  of  new  ones.  In  particular,  this  is  observed  when  the  cap  does  not  apply  to  the 

realised  income  a  producer  receives  from  the  PPA,  but  to  “assumed”  (fictitious)  income 

corresponding,  for  example,  to  the  wholesale  electricity  prices,  ultimately  leading  to 

paradoxical situations whereby the producer may be forced to sell electricity at a loss.  

A  potential  prolongation  of  the  measure  would  hinder  one  of  the  objectives  set  out  in  the 

electricity  market  design  proposal,  namely  to  incentivize  the  uptake  of  PPAs  and  ensure  as 

liquid a PPA market as possible. PPAs are instruments that provide long-term price stability for 

the  off-taker  and  the  necessary  certainty  for  the  producer  to  take  the  investment  decision. 

Nevertheless,  only  a  handful  of  Member  States  have  active  PPA  markets  and  buyers  are 

typically limited to large companies, not least because PPAs face a set of barriers, in particular 

the difficulty to cover the risk of payment default from the buyer in these long-term agreements. 

Hence, according to the proposal,  Member States should take into consideration the need to 

create a dynamic PPA market when setting the policies to achieve the energy decarbonisation 

objectives set  out  in their integrated national  energy and climate plans. To address  the risks 

related  to  creditworthiness,  the  proposal  sets  out  that  Member  States  should  ensure  that 

21 To ensure the security of supply, Article 8(1)(b) of the Council Regulation allows Member States to set a higher 
cap on market revenues for producers that would otherwise be subject to the Union-wide cap on market revenues, 
when their investment and operating costs are higher than the Union-wide cap on market revenues. 13 Member 
States  have  incorporated  this  possibility  in  their  national  implementation  of  the  inframarginal  revenue  cap,  in 
particular for lignite, biomass and oil generation plants. 

12 

 
 
                                                           
instruments  to  reduce  the  financial  risk  associated  to  off-taker  payment  default,  including 

guarantee schemes at market prices, are accessible to companies that face entry barriers to the 

PPA market and are not in financial difficulty. The proposal includes additional requirements 

aiming to encourage the growth of the market for such agreements.  

In addition, the different ways in which Member States have implemented the revenue cap have 

created significant regulatory uncertainty, which, in turn, pose risks to the development of new 

investments, particularly in  renewable sources, necessary to  achieve the  EU’s objectives.  In 

particular, the reported difficulties in some Member States that relate to the conclusion of long-

term  contracts,  including  PPAs,  as  a  result  of  the  implementation  of  the  revenue  cap  could 

create an additional layer of investor uncertainty and hinder the attractiveness and stakeholder 

confidence  in  forward  markets.  The  above-mentioned  risks  may  ultimately  undermine  the 

establishment of an attractive investment environment for renewable and low carbon generation 

targeted by the electricity market design proposal and, ultimately, the energy transition.  

Finally,  the  public  consultation  included  questions  on  a  possible  prolongation  of  the 

inframarginal revenue cap.  Most of the respondents were against it because of the following 

risks and challenges such prolongation of the measure would entail:   

 

the  heterogeneous  implementation  of  the  inframarginal  revenue  cap  across  Member 

States  appears  to  have  created  uncertainty  for  investors  and  has  been  reported  as  a 

disincentive for new investments;  

 

the  measure  is  difficult  to  implement,  and  its  administrative  costs  are  high  when 

compared with its benefits;  

  when the inframarginal revenue cap is set at a low level, as some Member States have 

opted for, generators may be inclined to reduce their production while the cap is in place;  

  consumer  protection  can  be  secured  without  interfering  with  the  electricity  market 

design, for example, through the adoption of targeted social policies. 

Only a minority of respondents supported the prolongation of the inframarginal revenue cap, 

either  as  set  out  in  the  Council  Regulation  or  with  slight  modifications.  Those  respondents 

largely based their input on the benefits of the measure to final consumers. 

Considering  the  information  currently  available  to  the  Commission,  as  set  out  above,  the 

Commission does not recommend the prolongation of the Council Regulation with respect to 

the inframarginal revenue cap.  

13 

 
 
The Commission notes that to mitigate the impact of high energy prices on consumers’ bills, it 

has proposed in its electricity market reform to promote the development of long-term markets 

so that the revenues of the inframarginal generators and the prices paid by final consumers are 

less  determined  by  the  volatile  short-term  wholesale  electricity  market  price.  Based  on  the 

Commission’s proposal, these revenues and prices will be shaped mostly by reference to long-

term  contracts,  such  as  PPAs  and  so-called  two-way  contracts  for  difference,  depending  on 

whether the installation was privately or publicly funded. In the case of contracts for difference, 

they will generate a pay-out when market prices become high. The proposal sets that this payout 

will have to be used by Member States to directly lower the electricity bills of all electricity 

customers  (including  companies  and  industry),  having  thus  a  similar  effect  as  that  of  an 

inframarginal revenue cap, but without creating investor uncertainty. 

VI.  Support for final consumers 

Section  3  of  Chapter  II  of  Council  Regulation  is  addressed  to  the  retail  market  and  allows 

Member  States  to  temporary  extend  public  intervention  in  price  setting  for  the  supply  of 

electricity to small and medium enterprises (SME) (Article 12) and for both households and 

SMEs exceptionally and temporarily set retail prices below costs (Article 13). 

Public intervention in price setting for households existed before the crisis in eleven countries, 

namely  Belgium,  Bulgaria,  France,  Greece,  Hungary,  Italy,  Lithuania,  Poland,  Portugal, 

Romania and Slovakia 22 in the form of regulated prices or social tariffs. During the crisis seven 

additional Member States introduced price regulation for households, namely Croatia, Czechia, 

Estonia, Finland, Luxembourg, the Netherlands and Slovenia. 

Out of 25 assessments received, 12 Member States reported making use of the measures in the 

Council regulation. 4 Member States, namely Czechia, Estonia, Slovenia and Poland, reported 

having introduced regulated retail prices for SMEs under Article 12 of the Council Regulation. 

Additionally,  France  and  Slovakia,  who  have  regulated  prices  for  households,  reported 

compensation schemes for SMEs, in line with the Temporary Crisis and Transition framework 

(TCTF)23 under State aid rules.  The Netherlands  intervened in price setting  to ensure below 

cost  electricity  prices  for  households  and  businesses.  This  scheme  was  notified  to  the 

Commission and approved under the applicable State aid framework.24  

22 Based on information received from Member States, reports from National Regulatory Authorities and measures 
self-assessed by Member States. 
23 Communication from the Commission Temporary Crisis and Transition Framework for State Aid measures to 
support the economy following the aggression against Ukraine by Russia, 2023/C 101/03. 
24 SA.106377 TCTF - Netherlands - Scheme for the reduction of energy costs. 

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Although Article 13 point (c) of the Council Regulation requires Member States to compensate 

suppliers for the cost of supplying electricity below cost, Member States did not include specific 

information on this point in their reports.   

Additionally, some Member States mentioned other types of intervention towards SMEs. For 

example, Portugal mentioned the reduction of network tariffs as a price intervention tailored to 

SMEs.  Denmark,  Latvia  and  Sweden  established  different  price  setting  interventions  for 

different  groups  of  consumers  (actions  on  tax,  levies,  rebates,  compensation  schemes,  etc.). 

Germany implemented an economy-wide scheme compensating increased electricity costs to 

undertakings, without however affecting the freedom of suppliers to act on the market.25 

Articles 12 and 13 also require that any public intervention in the retail market should preserve 

an  incentive  to  reduce  electricity  demand.  In  this  regard,  several  Member  States,  such  as 

Austria,  Germany,  Croatia,  the  Netherlands  and  Romania,  reported  schemes  based  on 

consumption ceilings, including interventions in price setting or direct or indirect compensation 

schemes to final consumers.  

There  are  significant  downsides  to  regulated  prices.  In  particular,  they  can  reduce  energy 

efficiency  incentives  and  undermine  competition  to  the  long-term  detriment  of  consumers. 

These  concerns  underline  the  importance  of  the  rules  applicable  in  the  Electricity  Directive 

2019/944, which the Council Regulation derogates from. 

Assessment on prolongation of the measure 

The crisis measure affording Member States the possibility to cap prices for households and 

SMEs has clearly proved of use as several Member States have taken the opportunity to extend 

existing schemes or to create new ones in very short timelines.  

In the market design reform proposal, the Commission proposed new provisions similar to those 

in the Council Regulation, following an assessment of the advantages and disadvantages of the 

retail measures that had been reported by Member States, the results of the public consultation 

and in view of its fiscal policy guidance to Member States for 202426  More specifically, the 

Commission  proposed  that  Member  States  may  introduce,  during  an  electricity  price  crisis, 

25 The scheme was approved by the Commission under State aid rules, in line with the TCTF. SA.104606 TCTF - 
Germany - Temporary cost containment of natural gas, heat and electricity price increases (JOCE C/061/2023). 
26 “Member States should phase out energy support measures, starting with the least targeted ones. If an extension 
of support measures would be necessary because of renewed energy pressures, Member States should target their 
measures much better than in the past, refraining from generalised support and only protecting those who need it, 
namely vulnerable households and firms”, COM(2023) 141 Fiscal policy guidance for 2024. 

15 

 
 
                                                           
targeted  price  intervention  for  households  and  SMEs,  including  at  below  cost  levels,  for  a 

limited volume of electricity consumption, and for a limited period of time.  

This possibility comes in addition to the existing protection framework for energy poor and 

vulnerable  consumers  provided  for  in  the  Electricity  Directive,  under  which  Member  States 

may apply social tariffs to energy poor and vulnerable consumers and temporarily regulate retail 

prices for households and microenterprises until market competition is fully established.  

As the measure, in substance, has been  included in the Commission market design proposal, 

and taking into consideration the information currently available to the Commission, as set out 

above, the Commission does not see a current need to prolong the measure at this stage. 

VII.  Preliminary conclusions  

This  Report  presented an overview of the  responses received by Member States  on (i) their 

demand reduction measures; (ii) the implementation of the inframarginal revenue cap; and (iii) 

retail price setting interventions set out in Chapter II of the Council Regulation. The Report also 

presented an overview of the input submitted by the respondents to the public consultation on 

the same topics. The information assessed in this Report and the conditions in the electricity 

supply and prices in the EU currently and as foreseeable under normal circumstances, do not 

provide  evidence  that  a  prolongation  of  each  of  the  demand  reduction  measures,  the 

inframarginal revenue cap and retail interventions would be necessary or advisable.  

First, with respect to demand reduction measures, all reporting Member States appear to have 

implemented  measures  to  reduce  electricity  demand,  mainly  through  awareness  raising 

campaigns  and  energy  saving  targeted  measures.  While  Member  States  report  that  they  are 

overall respecting the binding target of reducing electricity consumption by 5% at peak hours, 

it would seem that the reduction of the monthly gross electricity consumption by 10% presented 

challenges but this did not hinder the observed reduction in electricity prices.   

Based on the information available, the Commission does not see a current need to prolong the 

demand reduction measures set out in the Council Regulation. Barring unforeseeable changes, 

the current electricity market conditions do not render such prolongation necessary. This is also 

in line with the feedback received from most respondents to the public consultation. While no 

longer necessary in the short term and through the tools established by the Council Regulation, 

demand  response  is  important  for  well-functioning  electricity  markets.  For  this  reason,  the 

Commission has introduced it structurally in its electricity market design proposal.  

16 

 
 
Second, the review found that implementation of the revenue cap varies greatly across Member 

States.  Diverging  implementation  strategies  across  Member  States  have  reportedly  led  to 

significant investor uncertainty. This is compounded by the fact that in certain Member States 

the implementation of the cap has reportedly impacted the conclusion of PPAs and other long-

term contracts.  

Based on the information available, and given the current and foreseeable market conditions, 

the Commission considers  that the benefits of the current inframarginal revenue cap would not 

outweigh  the  impact  on  investor  certainty  and    the  risks  to  the  market  functioning  and  the 

transition.  The  challenges in the implementation process also discourage a prolongation of the 

inframarginal revenue cap set out in the Council Regulation. The Commission’s conclusion is 

in  line  with  the  feedback  received  from  most  respondents  to  the  public  consultation,  who 

opposed a prolongation of the measure due to the investor uncertainty concerns.  

Third, the review found that several Member States took advantage of the  possibility to widen 

the scope of retail price regulation in times of crisis to SMEs and apply price regulation below 

costs  under  certain  conditions.  In  its  electricity  market  design  proposal  the  Commission 

included equivalent provisions which allow Member States to exceptionally and temporarily 

intervene in retail markets by setting a price below costs for both households and SMEs during 

possible future crisis situations.  The adoption of the electricity market design proposal would 

ensure that such structural measures would be part of the EU regulatory framework, as soon as 

the adoption of the proposal takes place. In view of the above and against the background of 

current  and  expected  electricity  supply  and  price  conditions,  the  Commission  therefore 

considers that it is not necessary to prolong the provisions of Articles 12 and 13 of the Council 

Regulation.   

Finally, given that this Report is based on information submitted by Member States only a few 

months following the entry into force of the Council Regulation measures, the Commission’s 

conclusions are therefore without prejudice to any additional information the Commission may 

receive from Member States or any unforeseen changes of the general situation of electricity 

supply and prices in the EU. Should the information on which the Commission has based this 

Report significantly change, the Commission may need to adjust its conclusions accordingly or 

act swiftly in case the state of the market so requires. 

17