Factbox-Europe grapples with surging power and gas prices

·4-min read
FILE PHOTO: General view of smoke coming from a chimney of an energy plant in Dublin

(Reuters) -Households across Europe face a jump in energy bills this winter due to a global surge in wholesale power and gas prices.

Benchmark European gas prices have surged around 250% this year due to low stock levels, high demand in Asia, high carbon prices and outages.

Governments across Europe are coming under pressure to curb energy bills to help families and small businesses as economies slowly emerge from the coronavirus pandemic.

Following are some of the measures the countries are considering:

BRITAIN

Britain is considering offering state loans to energy companies that take on customers from firms which go bust due to soaring wholesale natural gas prices, Business Secretary Kwasi Kwarteng said on Sept. 21.

The unprecedented jump in wholesale prices will force more British energy suppliers out of business and the industry needs to prepare for prolonged pain, energy officials and the business minister said on Sept. 22.

The country's energy regulator Ofgem has raised the cap on the most widely used tariffs by 12-13% from October, after increasing it in April due to high wholesale costs.

EUROPEAN UNION

The European Union executive said on Sept. 22 it will produce a "toolbox" of measures EU countries can take to tackle energy price spikes without breaching the bloc's energy market rules.

The toolbox would help governments navigate options to respond quickly to price spikes within EU rules, including tweaking value-added tax (VAT) and excise duties or using direct support to shield consumers from high costs

A group of lawmakers has asked the European Commission to investigate the role of Russia's Gazprom, saying the company's behaviour has made them suspect market manipulation.

In response, Gazprom says it supplies its customers with gas in full compliance with existing contracts.

FRANCE

The French government on Sept. 15 announced plans to make a one-off 100 euro ($118) payment to the 5.8 million households that receive energy vouchers.

GERMANY

Some 310,000 German households face an 11.5% increase in their gas bills, data showed on Sep. 20, while energy experts have warned some suppliers could go insolvent amid record wholesale rates.

Germany does not see a need for government intervention to counter rising gas prices, a spokesperson for the economy ministry said on Sept. 22.

The country does not have a utility price cap. Its 41.5 million households buy their energy in a flourishing but mostly unsupervised retail sector that was liberalised to create choice and dismantle monopolies.

The Bundesnetzagentur (BNetzA), the country's regulator, said it was not tasked with monitoring procurement strategies or pricing mechanisms at suppliers.

GREECE

Greece announced plans on Sept. 14 to offer subsidies to the majority of Greek households by the end of the year.

This would include a 9 euro subsidy for the first 300 kilowatt hours consumed a month, higher one-off payments to low income earners, and bigger discounts from the country's main state-owned utility.

ITALY

Italy will introduce short-term measures which could be worth some 3 billion euros to offset the expected rise in retail power prices, and is working on a longer-term reform of power bills, its energy transition minister said on Sep. 16.

PORTUGAL

Portugal's environment minister Joao Matos Fernandes told a press conference https://www.portugal.gov.pt/pt/gc22/comunicacao/noticia?i=preco-da-eletricidade-nao-sobe-no-mercado-regulado-em-2022-afirma-ministro-do-ambiente-e-da-acao-climatica on Sept. 21 that electricity prices for domestic consumers in the regulated market would stay flat in 2022.

SPAIN

Spain urged the EU on Sept. 20 to devise guidance for its member states and suggested moves to limit carbon market speculators and build up gas reserves.

"We urgently need a European policy menu predesigned to react immediately to dramatic price surges," Economy Minister Nadia Calvino and Energy and Environment Minister Teresa Ribera said in a document sent to the Commission.

Spain's proposals also call for the establishment of a centralised European platform to buy gas.

The previous week, Spain had passed emergency measures to lower bills by redirecting 2.6 billion euros in extraordinary profits from energy companies to consumers and capping increases in gas prices.

(Compiled by Tommy Lund, Sarah Morland and Dagmarah Mackos; Editing by Nina Chestney, Mark Potter and Jan Harvey)

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting