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Dear billers, the EU has agreed to a maximum cap on energy revenue and redistribution of profits

Last weekend, EU energy ministers approved the first package of emergency measures designed to curb rising electricity bills, help families in difficulty, and coordinate member states’ responses to the energy crisis. The package comes after less than a month of negotiations and includes measures such as mandatory energy savings, capping excess market revenue, and a forced tax to reap excess corporate profits. At the moment, no cap on the import price of gas has been imposed at the EU level, a measure that Italy has been demanding and is still being considered for adoption in the future. The moment is critical and the increases are there for all to see, and for the first time Eurozone inflation has reached and exceeded 10%, a trend clearly driven by the rise in energy bills. So the European Union decided to work in two different directions: on the one hand, it aims to reduce electricity consumption during peak hours, and on the other hand, to use part of the exaggerated profits made by energy companies due to inflated prices that cause speculation. The discussion began on Friday morning and a few hours later the ministers reached an agreement that stipulated three main measures to be adopted upon expiration until the situation returns to normal, which we list below. Energy saving: A mandatory target has been set to reduce consumption by 5% during peak hours, that is, when gas plays the most important role in determining prices, in addition to the voluntary reduction of countries by 10% of total energy demand. Electricity. Excess revenue ceiling: It relates to the revenues generated by power plants that do not use gas to produce electricity, such as solar energy, wind energy, nuclear energy, hydropower and lignite. The cap will be standardized and set at €180 per MWh. Any revenue that exceeds this hurdle will be collected by governments. Dividend Redistribution: The last action is closely related to the previous one and is also related to energy companies. It provides for a solidarity mechanism aimed at redistributing excess profits made by fossil fuel companies (crude oil, gas, coal and refinery). The relevant authorities will have the power to tax 33% on the profits made by these companies in the 2022 fiscal year, as long as the profits represent a 20% increase over the average from 2018. The additional funds obtained through the second and third will be used to ensure that Each state provides benefits and income support measures to all families and businesses in financial difficulty. In the event that any member state has already taken similar directions, it can continue in the same way, as long as it maintains the direction imposed by the European Union. This package is the first step forward in addressing the energy crisis at a time that, with the approach of winter, appears particularly sensitive for the entire European region. However, although it represents a crucial step in the right direction, it is a common opinion that other measures need to be implemented to mitigate the loss of purchasing power of households and businesses.

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