On 6 October 2022, the Council of the European Union adopted a Regulation on an emergency intervention to address high energy prices (the “Regulation”). The Regulation was published in the Official Journal of the European Union on 7 October. The Regulation has three main elements:
- A requirement to reduce electricity consumption by 5% in peak hours;
- A measure to return the excess revenues or profits of energy companies to the individual Member States; and
- The allocation of proceeds to customers to alleviate retail electricity prices and an extension to Small and Medium-sized Enterprises (SMEs) of the categories of beneficiaries of a possible Member State intervention in the retail price.
The Regulation’s market intervention is exceptional (albeit in response to an extraordinary geopolitical market disruption). It will have widespread positive and negative impacts for energy market sellers and buyers. These circumstances may provoke a range of disputes, transaction (re)structurings or additional compliance obligations that will require expert advice and understanding of the details of the Regulation.