Ms Catharina Sikow-Magny:

I thank the Deputy for the questions. We have received from most member states - I think we are only missing two - reports on how they have implemented the regulation. Regarding the revenue gap demand reduction and retail prices, we will report around mid-May, as I mentioned. For the solidarity contribution, the reporting time will obviously be later. We have received from member states their indication regarding how they intend to implement that part of the proposal. As we are bound by the tax year, however, the reporting in that regard will follow later. This also explains the difference in terms of the application of the two measures.

I wish to highlight that what I call the €180-per-megawatt-hour cap for short, acknowledging that member states have implemented it somewhat differently and used different technologies, has not been applicable since a few days after its application. This is good news because electricity prices have turned downwards and in many places are approaching the prewar prices. I heard, though, what an earlier member mentioned about the situation in Ireland.

When we took these measures in the crisis situation we did indeed keep in mind the longer term and the need to decarbonise. This is why I also briefly referred to the other proposals the Commission made, including, for example, REPowerEU, which puts a strong emphasis on getting renewables in place rapidly. I refer to rapid investment in this regard and the provisions we proposed for permitting to speed up investment in renewables, energy efficiency measures and the rest. Those are the permanent solutions to lacking Russian gas supplies in the first place, and then clearly moving more rapidly towards net zero overall.

The energy and climate policy has several objectives, however, and one of them is clearly the decarbonisation aspect to which I just referred. Another important objective, though, is having a secure supply and ensuring we have electricity and heating at all times. This aspect had to be taken into account too. The third element is affordability and trying to bring electricity to the market at the lowest cost, given the circumstances.

The Deputy asked about the move away from marginal cost pricing. Marginal cost pricing will remain in the short-term market. That is in the day-ahead and intra-day markets, which are the last moments to make sure supply matches demand and we are not suddenly lacking electricity. That is where the price signal is extremely important. If there is not enough wind, for example, we then get alternative sources, be they from production or demand response, into play. The long-term price signal and the long-term contracts are an important and necessary complement for these short-term markets. They give price stability and predictability.

We made a proposal to make the two-way contract for difference an obligation for member states when public support is needed for renewables. I reiterate that there are a lot of renewables currently implemented without public support and that will obviously remain an important source of investments. However, when public support is needed, we obligate member states to go for a two-way contract for difference, and the reason for that is very simple, as Deputy Bruton said. However, this is not the current practice in all member states. We still see situations whereby there is a premium on top of the market price and it is clear what this meant for prices at the peak of the crisis. If member states have signed up to support schemes with renewable producers, those contracts obviously need to be complied with. They are contracts and retroactivity in renewable contracts, for instance, is forbidden by the renewables directive. There is indeed a possibility that some member states will be locked in to contracts that were made in the past.

On the question of auctions, the contract for difference we then promote must be based on commercial ways, where an auction is the best way to organise it. The rules for auctions will remain, except for the contract type, for describing how the two-way contract for difference is to be implemented and how producers are expected to respond to that. With the two-way contract, to determine the strike price, member states may also wish to have a price corridor to keep a little bit of price risk for the producer.

On the role of the price in the context of high prices, we have to keep in mind that, with electricity, the price varies, depending on the market, every half an hour. It depends on the supply and on when the sun sets, for example, with solar power. The price varies a lot depending on supply and demand. Demand also varies a lot during the day. The answer to how the market cleared comes from many sources. In the highest peaks, there was demand reduction. Sometimes it was demand reduction by householders who decided they would switch off their heating for a while, for example. There was also demand reduction by companies. In many member states, big consumers of electricity have contracts whereby they reduce their demand if the market situation requires that and, typically, member states slightly lower prices overall as a compensation for this flexibility. However, demand reduction overall was less than would have been expected. The figures we have seen from member states, which will be included in our report around mid-May, show reductions of between 5% and 10%. Many member states are in the order of 7%. Whether it is demand reduction because of the very high price or demand reduction by companies which have contracts under which they offer flexibility, it varies from member state to member state so it is difficult for us to say exactly what is going on. At the same time, there has also been capacity coming on to the market. We have strategic reserves in member states, which means there is capacity there if things go wrong. This was brought on to the market because of the high prices and the crisis situation. Thus, in terms of capacity, strategic reserves played a role in some member states.

Many renewables came on stream and many households also speeded up considerably their installation of solar panels and heat pumps. There was more supply thanks to the speeding up of investments that many would have delayed or not made at all. This is especially true of households. The number of solar panels and heat pumps installed increased dramatically during the crisis, which allowed consumers and households to benefit from lower prices. Many different ways of addressing the high prices have been in play in all member states.