EU to propose price cap on Russian gas, von der Leyen says

European Commission President Ursula von der Leyen speaks during a news conference on the energy crisis, in Brussels, Belgium September 7, 2022. REUTERS/Johanna Geron

BRUSSELS -The European Commission will propose a price cap on Russian gas, alongside measures including a mandatory EU cut in electricity use and a cap on the revenue of non-gas power generators, the bloc’s chief said on Wednesday.

“We will propose a price cap on Russian gas… We must cut Russia’s revenues which Putin uses to finance this atrocious war in Ukraine,” European Commission President Ursula von der Leyen told reporters.

President Vladimir Putin said on Wednesday that Russia will stop supplying gas and oil if price caps are imposed.

Some EU countries – which would need to approve the EU proposals – are wary of capping Russian gas prices in case that costs them the dwindling supply they still receive from Moscow.

Von der Leyen outlined the EU’s upcoming emergency proposals to lower soaring gas and power prices, which have hiked bills for households and hammered Europe’s energy-intensive industries.

The EU wants to cap the revenue of non-gas fueled generators and rechannel their “unexpected profits” into measures that support households and companies, von der Leyen said.

European power prices are typically set by gas plants, and the cap would aim to reduce the cost of electricity generated by wind farms, nuclear plants and coal generators that have lower running costs as they are not exposed to surging gas prices.

Oil and gas firms that have posted huge jumps in profits would also be required to make a “solidarity contribution”, von der Leyen said, without giving further detail.

Other measures Brussels will put forward include a requirement for countries to cut electricity use during peak hours, and liquidity help for firms facing huge collateral requirements.

EU countries’ energy ministers will discuss the proposals at an emergency meeting on Friday.

Power and fuel prices have soared in Europe as Russia has curbed the amount of gas it sends to Europe. Moscow has blamed the supply cuts on technical issues and Western sanctions imposed over its invasion of Ukraine.