The EU’s plan to cool energy prices

European energy executives are doing a little too well these days. 

That is, if you ask European Commission President Ursula von der Leyen, who wants to make them pay up as part of a plan to bring down electricity costs.  

Driving the news: The European Union has laid down plans to collect over $140 billion from thriving energy firms to help shield consumers from soaring energy prices, per Reuters. 

  • That plan would include collecting excess revenues from companies unfairly benefiting from price spikes to lower bills or heighten energy-saving measures. 

Catch up: Gas prices soared (annual energy bills in the UK are expected to increase to $6,500 by early 2023) after Russia cut fuel exports to retaliate for Western sanctions

  • Energy companies with healthy profit margins have since become a target for leaders desperate to offer households and businesses some needed relief.
  • "In these times, it is wrong to receive extraordinary record revenues and profits benefiting from war and on the back of our consumers," said von der Leyen.

Why it matters: When record high energy prices leave power producers rolling in profits and households and businesses footing the tab, government intervention becomes necessary. 

  • Countries have responded with many measures like capping prices (Hungary), one-off cash handouts (Denmark), and cutting taxes on energy bills (Spain).
  • Germany has confirmed it’s open to taking the historic step of nationalizing the country’s biggest gas importer to prevent a collapse of the energy system.

Zoom out: This is one of many plans in development that aims to control an energy crisis threatening to bankrupt businesses, squeeze households, and plunge the economy into a recession.