BRUSSELS (AP) — A senior European Union official on Wednesday unveiled a plan to cap the revenues of power-generating companies that are making windfall profits due to war in Ukraine and climate change, saying the proposal could raise $140 billion to help those affected by spiraling energy prices.
“These companies are making revenues that they never accounted for, that they never even dreamed of,” European Commission President Ursula von der Leyen told EU lawmakers in Strasbourg, France.
“In our social market economy, profits are good, that’s good. But in these times, it is wrong to receive extraordinary record revenues and profits benefiting from war and on the backs of consumers. In these times, benefits must be shared and channeled to those who need it most,” she said.
“Our proposal will raise more than 140 billion euros ($140 billion) for member states to directly cushion the blow,” von der Leyen said in a “State of the European Union” address to the assembly of the EU.
As winter approaches, the 27 member countries of the EU are struggling to contain an energy crisis that could lead to power outages, factory closures and a deep recession. Russia has already partially or completely cut gas supplies to 13 member countries.
Europe has also been hit by a drought which experts say is the worst in 500 years.
Von der Leyen, dressed in a blue top and a yellow jacket in Ukraine’s national colors, also said the 27-nation bloc’s electricity market needed to be reformed to properly deal with the crisis of rising energy prices hurting European businesses and households.
She said a “deep and comprehensive reform of the electricity market” is needed to reduce the influence of natural gas on how prices are set. Natural gas is used to power industry, heat homes and offices, and generate electricity.
Even before Russia began its war against Ukraine, many EU member states had called for deep and structural reform of the bloc’s energy market because they felt that the influence of gas in the fixing of wholesale electricity prices was disproportionate.
“The current design of the electricity market … no longer does consumers justice,” von der Leyen said.
She also announced that she would travel to Kyiv later on Wednesday.
Raf Casert in Brussels contributed to this report.
Lorne Cook and Samuel Petrequin, The Associated Press