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:

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.

Reduction in electricity consumption

EU Member States will endeavour to reach an overall 10% reduction in electricity consumption by all consumers.  The benchmark against which that reduction will be measured is the average of gross electricity consumption in the corresponding months of the reference period, i.e. from 1 November to 31 March in the five preceding years, starting from 2017.  In addition, in order to reduce retail prices and improve supply security, Member States are obliged to deliver a 5% reduction of electricity consumption during peak hours, (defined as the hours of the day where day-ahead wholesale electricity prices are expected to be the highest; gross electricity consumption is expected to be the highest; or gross consumption of electricity generated from sources other than renewable sources is expected to be the highest).  These measures will apply from 1 December 2022 until 31 March 2023.