Europe’s energy crisis: European nations scramble to help households with soaring bills

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European governments are scrambling to find ways to shield households and businesses feeling the impact of the surge in energy prices that have soared to record highs.

The Czech Republic, which holds the European Union’s rotating presidency, is considering whether to call an emergency energy summit for the bloc which could include discussing price caps, a government minister said on Wednesday.

“The market has got out of control to a certain extent,” industry minister Jozef Sikela was quoted as saying by Czech media.

“It is a problem in all of Europe, and of course, if you have a European market and European problem, then the easiest solution can be found on the European level.”

Sikela said setting a maximum energy price on the European level would be one possible measure, and that the Czech Republic would support this if the EU decided to look at it. 

Europe is facing a sharp rise in power bills driven by skyrocketing gas prices. Russia has cut the amount of gas it sends to Europe and prices have surged over fears that Moscow will further reduce supplies in retaliation for Western sanctions over its invasion of Ukraine.

In Italy, Prime Minister Mario Draghi said on Wednesday that EU countries should agree on a cap on the price of gas they import from Russia. 

Spain and Portugal have already limited local gas-based power prices, while France has capped electricity price hikes.

French President Emmanuel Macron called for unity in his government on Wednesday, faced with what he described as “a great upheaval” and “the end of abundance”.

Political commentators said Macron was preparing the country for hard times ahead. But he was criticised by left-wing figures who accused the president of being out of touch with millions whose everyday experience was anything but abundant.

Germany, which fears a gas shortage, enacted a series of energy-saving measures on Wednesday, calling on individuals and businesses to follow suit.

Heating in public offices and buildings will be capped at 19 degrees from September 1, reduced to 12 degrees where employees are doing intensive physical work, switched off altogether in common areas such as corridors, and there will be no hot water for washing hands.

The private sector will be encouraged, but not forced, to lower minimum temperatures. Hospitals and social institutions are exempt from the measures, which are aimed at reducing gas consumption in Germany by two per cent.

“We don’t want to measure temperatures in bedrooms, and individual freedom must prevail,” said economy minister Robert Habeck, appealing to a sense of “responsibility” among households to “contribute” to reducing energy consumption.

Europe’s largest economy will have to reduce its consumption by 20% if it wants to avoid shortages this winter, according to expert modelling. 

“We still have a long way to go,” Habeck warned.

Earlier this week, benchmark gas prices in the EU surged 13% overnight to a record peak, having doubled in just a month to be 14 times higher than the average of the past decade.

The European Commission said this month it was “urgently assessing the different possibilities to introduce price caps for gas”, without elaborating on what form such a cap would take.

Brussels said it would consult EU member states on price caps and report back with proposals in the autumn if they were needed.

Energy ministers from EU countries are already due to meet for a summit in October.

In the UK, the next energy price cap — limiting what suppliers can charge per unit in England, Scotland and Wales — is due to be announced on Friday. A big rise in tariffs is expected.

Bills for most British households are forecast by analysts to rise from £1,971 (€2,331) a year to around £3,500 (€4,139), and then again until April. The most pessimistic projections speak of £6,000 (€7,098) a year.

A study by the University of York predicts that 58% of Britons will be in fuel poverty next year.

The cost of living crisis is overshadowing other issues in the battle between Liz Truss and Rishi Sunak to succeed Boris Johnson as leader of the ruling Conservative Party, and become the country’s new prime minister. 

On Thursday, a think tank said the next leader must adopt radical ideas — such as discounted power tariffs, energy bill freezes or a “solidarity” tax hike for higher earners — to cushion the energy price shock.

The Resolution Foundation said tens of billions of pounds in new government support had to be targeted at households least able to cope.

Visiting Ukraine on Wednesday on its independence day, Boris Johnson urged continued support for the country in its fight against Russia, despite the cost of the energy crisis.

“If we’re paying in our energy bills for the evils of Vladimir Putin, the people of Ukraine are paying in their blood,” he said.