Oireachtas Joint and Select Committees

Tuesday, 18 April 2023

Joint Oireachtas Committee on Climate Action

Pre-Legislative Scrutiny of the General Scheme of the Energy (Windfall Gains in the Energy Sector) Bill 2023

Ms Catharina Sikow-Magny:

Many thanks for the questions. Member states have taken different approaches when implementing the regulation, and it would take too much time to go through those examples now. Some of the measures are still being implemented, especially the part on the solidarity contribution, which is still being implemented in many member states because of the tax year there. Therefore, we do not necessarily have the information on those to hand at this point. I am happy to come back with a written response on the capital questions, so I will leave that for later.

On the question of the solidarity contribution and the situation in member states on the effective tax, my first comment is that part of the regulation will not apply to all member states because not all member states have such activities in their territory, so it is already geographically rather limited in terms of application. One of the reasons it was proposed as a solidarity contribution and not as a taxation measure is to make sure that, in this exceptional situation where prices were higher and profits were extraordinarily high, member states could claw back these not normal but extraordinary profits and help consumers with those revenues. That is why we did not propose it as a taxation measure, because it would have interfered in a very complex manner with member states’ schemes as they are currently in place.

I may need to clarify a point on households versus companies. I am sorry; I may have been cutting corners a bit in that regard. Obviously, where companies already have contracts whereby they offer collective flexibility to the market, thereby reducing their consumption when needed because of the scarcity situation in the market, these are contracts that have already existed for many years and sometimes decades. They are typically big, energy-intensive companies that can ramp up and ramp down their production when required to do so. All of the rest, and that is the large majority of companies and households, do not yet have this possibility. We expect that possibility to be offered also in future to all households through the suppliers in the market design proposal, through the big saving product, and possibly for the flexibility products through demand response and storage. In addition to households, many companies, especially the smaller ones, were faced with high prices in the market. That is why we have put a lot of emphasis that the benefit of the two measures - the revenue cap measure and the revenues therefrom and the solidarity measure and the revenues therefrom - should go to households and especially to small and medium-size companies that do not yet have this possibility to offer flexibility to the market.

On the question of the Energy Charter Treaty, it is a little beyond the topic of today, but we have certainly already seen many member states that have withdrawn from the treaty, and the Commission is also doing that for the EU. That concerns the question of the content of the charter. Our main aim initially was to reform the Energy Community Treaty and that would have been our preferred option, but as that was not forthcoming as rapidly as we wanted, other decisions have been taken on that front.

On the Senator’s last question, it is not for me to comment on that today. Sorry for that.

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