Article 1 Subject matter and scope
This Regulation establishes an emergency intervention to mitigate the effects of high energy prices through exceptional, targeted and time-limited measures. Those measures aim to reduce electricity consumption, to introduce a cap on market revenues that certain producers receive from the generation of electricity and redistribute to final electricity customers in a targeted manner, to enable Member States to apply measures of public intervention in the price setting for the supply of electricity for household customers and SMEs, and to establish rules for a mandatory temporary solidarity contribution from Union companies and permanent establishments with activities in the crude petroleum, natural 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 set out in Article 2 of Regulation (EU) 2019/943 and Article 2 of Directive (EU) 2019/944 apply. In addition, the following definitions also apply: (1) ‘small and medium-sized enterprise’ or ‘SME’ means an enterprise as defined in Article 2 of the Annex to Commission Recommendation 2003/361/EC ( 6 ) ; (2) ‘gross electricity consumption’ means overall supply of electricity for activities in the territory of a Member State; (3) ‘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; (4) ‘peak hours’ means individual hours of the day where, based on the forecasts of transmission system operators and, where applicable, nominated electricity market operators, day-ahead wholesale electricity prices are expected to be the highest, the gross electricity consumption is expected to be the highest or the gross consumption of electricity generated from sources other than renewable sources as referred to in Article 2(1) of Directive (EU) 2018/2001 of the European Parliament and of the Council ( 7 ) is expected to be the highest; (5) ‘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 Member States; (6) ‘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; (7) ‘competent authority’ means an authority as defined in Article 2(11) of Regulation (EU) 2019/941 of the European Parliament and of the Council ( 8 ) ; (8) ‘intermediaries’ means entities in wholesale electricity markets of Member States constituting an island not connected to other Member States with unit-based bidding where the regulatory authority has authorised those entities to participate in the market on behalf of the producer, excluding entities that transfer the surplus revenues directly to final electricity customers; (9) ‘surplus revenues’ means a positive difference between the market revenues of producers per MWh of electricity and the cap on market revenues of 180 EUR per MWh of electricity provided for in Article 6(1); (10) ‘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 of the European Parliament and of the Council ( 9 ) ; (11) ‘net import dependence’ means, for the period between 1 January 2021 and 31 December 2021, the difference between the total electricity imports and total electricity exports as a percentage of the total gross production of electricity in a Member State; (12) ‘fiscal year’ means a tax year, calendar year or any other appropriate period for tax purposes as defined in national law; (13) ‘final energy customer’ means a customer who purchases energy for own use; (14) ‘final electricity customer’ means a customer who purchases electricity for own use; (15) ‘Union company’ means a company established in 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; (16) ‘permanent establishment’ means a fixed place of business located in a Member State through which the business of a company established in 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 located; (17) ‘Union companies and permanent establishments with activities in the crude petroleum, natural gas, coal and refinery sectors’ means Union companies or permanent establishments generating at least 75 % of their turnover from economic activities in the field of the extraction, mining, refining of petroleum or manufacture of coke oven products, as referred to in Regulation (EC) No 1893/2006 of the European Parliament and of the Council ( 10 ) ; (18) ‘surplus profits’ means taxable profits, as determined under national tax rules in the fiscal year 2022 and/or the fiscal year 2023 and for their full duration, accrued from activities carried out at the level of Union companies and permanent establishments with activities in the crude petroleum, natural gas, coal and refinery sectors which are above a 20 % increase of the average of the taxable profits in the four fiscal years starting on or after 1 January 2018; (19) ‘solidarity contribution’ means a temporary measure intended to address surplus profits of Union companies and permanent establishments with activities in the crude petroleum, natural gas, coal and refinery sectors to mitigate exceptional price developments in the energy markets for Member States, consumers and companies; (20) ‘surplus congestion income revenues’ means the residual revenues that remain unused following the allocation of the congestion income revenues in accordance with the priority objectives set out in Article 19(2) of Regulation (EU) 2019/943; (21) ‘enacted equivalent national measure’ means a legislative, regulatory or administrative measure adopted and published by a Member State by 31 December 2022 which contributes to the affordability of energy.
Article 3 Reduction of gross electricity consumption
1. Member States shall endeavour 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. 2. When calculating the reduction of gross electricity consumption, Member States may take into account the increased gross electricity consumption that follows from reaching the gas demand reduction targets and general electrification efforts to phase out fossil fuels.
Article 4 Reduction of gross electricity consumption during peak hours
1. Each Member State shall identify peak hours corresponding in total to a minimum of 10 % of all hours of the period between 1 December 2022 and 31 March 2023. 2. Each Member State shall reduce its gross electricity consumption during the identified peak hours. The reduction achieved over the identified peak 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 hours and the gross electricity consumption forecasted by the transmission system operators in cooperation with the regulatory authority where applicable, without taking into account the effect of the measures put in place to reach the target set in this Article. Transmission system operators’ forecasts may include historical data of the reference period. 3. Member State may decide to target a percentage of peak hours different from the one set in paragraph 1, as long as at least 3 % of peak hours are covered, and as long as the energy saved during those peak hours is at least equal to the one that would have been saved with the parameters set out in paragraphs 1 and 2.
Article 5 Measures to achieve the demand reduction
Member States shall be free to choose the appropriate measures to reduce gross electricity consumption to meet the targets set in Articles 3 and 4, including extending national measures already in place. The measures shall be clearly defined, transparent, proportionate, targeted, non-discriminatory and verifiable, and shall in particular fulfil all of the following conditions: (a) where financial compensation is paid in addition to market revenues, the amount of that compensation shall be established through an open competitive process; (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; (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 independent aggregators, in accordance with Article 17 of Directive (EU) 2019/944; and (e) not unduly prevent the process of replacing fossil fuel technologies with technologies using electricity.
Article 6 Mandatory cap on market revenues
1. 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. 2. Member States shall ensure that the cap on market revenues targets all the market revenues of producers and, where relevant, intermediaries participating in electricity wholesale markets on behalf 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. 3. Member States shall put effective measures in place to prevent a circumvention of the obligations on producers pursuant to paragraph 2. They shall in particular make sure that the cap on market revenues is effectively applied in cases where producers are controlled, or partially owned, by other undertakings, in particular where they are part of a vertically integrated undertaking. 4. Member States shall decide whether to apply the cap on market revenues at the settlement of the exchange of energy or thereafter. 5. The Commission shall provide guidance to Member States in the implementation of this Article.
Article 7 Application of the cap on market revenues to electricity producers
1. The cap on market revenues provided for 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 biomethane; (f) waste; (g) nuclear energy; (h) lignite; (i) crude petroleum products; (j) peat. 2. The cap on market revenues 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 or public measures not adopted under Article 8. 3. Member States may, in particular in cases where the application of the cap on market revenues provided for in Article 6(1) leads to a significant administrative burden, decide that the cap on market revenues does not apply to producers generating electricity with power-generating facilities with an installed capacity of up to 1 MW. Member States may, in particular in cases where the application of the cap on market revenues provided for in Article 6(1) leads to a risk of increasing CO 2 emissions and decreasing renewable energy generation, decide that the cap on market revenues does not apply to electricity produced in hybrid plants which also use conventional energy sources. 4. Member States may decide that the cap on market revenues does not apply to the revenues obtained from the sale of electricity in the balancing energy market and from compensation for redispatching and countertrading. 5. Member States may decide that the cap on market revenues only applies to 90 % of the market revenues exceeding the cap on market revenues provided for in Article 6(1). 6. Producers, intermediaries and relevant market participants, as well as system operators where relevant, shall provide to competent authorities of Member States and, where relevant, to the system operators and nominated electricity market operators, all necessary data for the application of Article 6, including on the electricity produced and the related market revenues, regardless of the market timeframe in which the transaction takes place and of whether the electricity is traded bilaterally, within the same undertaking or in a centralised marketplace.
Article 8 National crisis measures
1. Member States may: (a) maintain or introduce measures that further limit the market revenues of producers generating electricity from the sources listed in Article 7(1), including the possibility to differentiate between technologies, as well as the market revenues of other market participants, including those active in electricity trading; (b) set a higher cap on market revenues for producers generating electricity from the sources listed in Article 7(1), provided that their investments and operating costs exceed the maximum set in Article 6(1); (c) maintain or introduce national measures to limit the market revenues of producers generating electricity from sources not referred to in Article 7(1); (d) set a specific cap on the market revenues obtained from the sale of electricity produced from hard coal; (e) subject the hydropower units not referred to in Article 7(1), point (d), to a cap on market revenues, or maintain or introduce such measures that further limit their market revenues, including the possibility to differentiate between technologies. 2. The measures referred to in paragraph 1 shall, in line with this Regulation: (a) be proportionate and non-discriminatory; (b) not jeopardise investment signals; (c) ensure that the investments and operating costs are covered; (d) not distort the functioning of electricity wholesale markets, and in particular, not affect the merit order and the price formation on the wholesale market; (e) be compatible with Union law.
Article 9 Distribution of surplus congestion income revenues resulting from allocation of cross-zonal capacity
1. By way of derogation from Union rules on congestion income, Member States may use the surplus congestion income revenues resulting from the allocation of cross-zonal capacity to finance measures in support of final electricity customers in accordance with Article 10. 2. The use of the surplus congestion income revenues in accordance with paragraph 1 shall be subject to approval by the regulatory authority of the Member State concerned. 3. Member States shall notify the use of surplus congestion income revenues in accordance with paragraph 1 to the Commission within one month of the date of adoption of the relevant national measure.
Article 10 Distribution of the surplus revenues
1. Member States shall ensure that all surplus revenues resulting from the application of the cap on market revenues are used to finance measures in support of final electricity customers that mitigate the impact of high electricity prices on those customers, in a targeted manner. 2. 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 provided for in Articles 3 and 4. 3. Where revenues obtained directly from the implementation of the cap on market revenues in their territory and revenues obtained indirectly from cross-border agreements are insufficient to adequately support final electricity customers, Member States shall be allowed to use other appropriate means such as budgetary resources for the same purpose and under the same conditions. 4. 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, including through proportional reductions in the network tariffs; (c) compensation to suppliers who have to deliver electricity to customers below costs following a State or public intervention in price setting pursuant to Article 13; (d) lowering the electricity purchase costs of final electricity customers, including for a limited volume of the electricity consumed; (e) promoting investments by final electricity customers into decarbonisation technologies, renewables and energy efficiency investments.
Article 11 Agreements between Member States
1. In situations where a Member State’s net import dependence is equal or higher than 100 %, an agreement to share the surplus revenues adequately shall be concluded by 1 December 2022 between the importing Member State and the main exporting Member State. All Member States may, in a spirit of solidarity, conclude such agreements which may also cover revenues coming from national crisis measures under Article 8, including electricity trading activities. 2. The Commission shall assist Member States throughout the negotiation process, as well as encourage and facilitate the exchange of best practices between Member States.
Article 12 Temporary extension to SMEs of public interventions in electricity price setting
By way of derogation from Union rules on public interventions in price setting, Member States may apply public interventions in price setting for the supply of electricity to SMEs. Such public interventions shall: (a) take into account the beneficiary’s annual consumption over the last five years and retain an incentive for demand reduction; (b) comply with the conditions set out in Article 5(4) and (7) of Directive (EU) 2019/944; (c) where relevant, comply with the conditions set out in Article 13 of this Regulation.
Article 13 Temporary possibility to set electricity prices below cost
By way of derogation from Union rules on public interventions in price setting, when applying public interventions in price setting for the supply of electricity pursuant to Article 5(6) of Directive (EU) 2019/944 or to Article 12 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; and (d) all suppliers are eligible to provide offers at the price for the supply of electricity which is below cost on the same basis.
Article 14 Support to final energy customers through a temporary solidarity contribution
1. Surplus profits generated by Union companies and permanent establishments with activities in the crude petroleum, natural gas, coal and refinery sectors shall be subject to a mandatory temporary solidarity contribution, unless Member States have enacted equivalent national measures. 2. Member States shall ensure that enacted equivalent national measures share similar objectives and are subject to similar rules as the temporary solidarity contribution under this Regulation and generate comparable or higher proceeds to the estimated proceeds from the solidarity contribution. 3. Member States shall adopt and publish measures implementing the mandatory temporary solidarity contribution referred to in paragraph 1 by 31 December 2022.
Article 15 Base for calculating the temporary solidarity contribution
The temporary solidarity contribution for Union companies and permanent establishments with activities in the crude petroleum, natural gas, coal and refinery sectors, including those that are part of a consolidated group merely for tax purposes, shall be calculated on the taxable profits, as determined under national tax rules, in the fiscal year 2022 and/or the fiscal year 2023 and for their full duration, which are above a 20 % increase of the average of the taxable profits, as determined under national tax rules, in the four fiscal years starting on or after 1 January 2018. If the average of the taxable profits in those four fiscal years is negative, the average taxable profits shall be zero for the purpose of calculating the temporary solidarity contribution.
Article 16 Rate for calculating the temporary solidarity contribution
1. The rate applicable for calculating the temporary solidarity contribution shall be at least 33 % of the base referred to in Article 15. 2. The temporary solidarity contribution shall apply in addition to the regular taxes and levies applicable according to the national law of a Member State.
Article 17 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 any of the following purposes: (a) financial support measures for final energy customers, and in particular vulnerable households, to mitigate the effects of high energy prices, in a targeted manner; (b) 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; (c) 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; (d) financial support measures to develop the energy autonomy, in particular investments in line with the REPowerEU objectives set in the REPowerEU Plan and in the REPowerEU Joint European Action such as projects with a cross-border dimension; (e) in a spirit of solidarity between Member States, Member States may assign 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 reskilling and upskilling of the workforce, or to promote investments in energy efficiency and renewable energy, including in cross-border projects, and in the Union renewable energy financing mechanism provided for in Article 33 of Regulation (EU) 2018/1999 of the European Parliament and of the Council ( 11 ) . 2. The measures referred to in paragraph 1 shall be clearly defined, transparent, proportionate, non-discriminatory and verifiable.
Article 18 Temporary nature of the solidarity contribution
The 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 years referred to in Article 15.
Article 19 Monitoring and enforcement
1. The competent authority of each Member State shall monitor the implementation of the measures referred to in Articles 3 to 7, 10, 12 and 13 on its territory. 2. As soon as possible after the entry into force of this Regulation and by 1 December 2022, Member States shall report to the Commission the planned measures to achieve the demand reduction required pursuant to Article 5 and the agreements between Member States concluded pursuant to Article 11. 3. By 31 January 2023 and again by 30 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 electricity customers pursuant to Article 10; (d) any public interventions in the price setting for the supply of electricity referred to in Articles 12 and 13. 4. Member States shall report to the Commission on: (a) the introduction of the temporary solidarity contribution pursuant to Article 14, including in which fiscal year(s) they will apply it, by 31 December 2022; (b) any subsequent amendments to the national legal framework within one month of the date of publication in their respective national official journals; (c) the use of the proceeds pursuant to Article 17 within one month of the date on which the proceeds have been collected by them in accordance with national law; (d) the enacted equivalent national measures referred to in Article 14 by 31 December 2022; Member States shall also provide an assessment of the amount of proceeds generated by those enacted equivalent national measures and on the use of those proceeds within one month of the date on which the proceeds have been collected by them in accordance with national law.
Article 20 Review
1. By 30 April 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 submit a report on the main findings of that review to the Council. Based on that report, the Commission may in particular propose, in the event that this is justified by the economic circumstances or the functioning of the electricity market in the Union and individual Member States, to extend the period of application of this Regulation, to amend the level of the cap on market revenues set in Article 6(1) and the sources of electricity generation referred to in Article 7(1) to which it applies, or to otherwise amend Chapter II. 2. By 15 October 2023 and again by 15 October 2024, 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 submit a report on the main findings of that review to the Council.
Article 21 Derogations
1. Articles 4 to 7 shall not apply to outermost regions within the meaning of Article 349 TFEU that cannot be interconnected with the Union electricity market. 2. Member States may decide not to apply Articles 4 to 7 to electricity generated in small isolated systems or small connected systems. 3. Articles 4 to 7 shall not be mandatory for Cyprus and Malta. If Cyprus decides to apply Articles 4 to 7, Article 6(1) shall not apply to electricity generated from crude petroleum products.
Article 22 Entry into force and application
1. This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union . 2. Without prejudice to the obligation to ensure the distribution of surplus revenues in accordance with Article 10, and to use the proceeds from the temporary solidarity contribution in accordance with Article 17, and without prejudice to the reporting obligation referred to in Article 20(2), this Regulation shall apply until 31 December 2023, subject to the following: (a) Article 4 shall apply from 1 December 2022 to 31 March 2023; (b) Articles 5 and 10 shall apply from 1 December 2022; (c) Articles 6, 7, and 8 shall apply from 1 December 2022 to 30 June 2023; (d) Article 20(2) shall apply until 15 October 2024.