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BRUSSELS — The European Union can limit the impact of high energy prices through joint gas purchases, possible use of unexpected profits and a possible price cap if Russia stops gas supplies, the European Commission said on Wednesday.

European energy prices hit record highs this year after the invasion of Ukraine by Russia, Europe’s largest gas supplier. That followed months of already high gas prices, fueled by rising demand in economies recovering from the COVID-19 pandemic.

The European Union executive has presented its “REPowerEU” plan to end the bloc’s reliance on Russian fossil fuels and accelerate renewable energy use, but also set out short-term options to reduce the damage to limit consumers.

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The Commission said energy prices are likely to remain high for the next three years, particularly for the remainder of 2022.

Some of the 27 members of the European Union have taken steps to cut energy bills and the Commission said it would allow certain measures until next winter, when energy demand soars.

These include regulations to limit prices for end-users, possible liquidity support for traders and energy companies and joint EU gas purchases designed to ensure competitive prices.

In the field of electricity, EU members could use the windfall from power generators to support consumers, expand regulated retail prices for smaller businesses and introduce fuel subsidies in regions with limited interconnections.

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If Russia stops supplying gas to the EU, the Commission will seek to coordinate a reduction in demand, including with less affected members cutting their demand for gas in favor of more affected EU countries.

It could also introduce an “administrative ceiling” on gas prices limited to the duration of the emergency, a move that would require new legislation.

The Commission said it will seek approval of its proposals by EU governments, call on them to speed up their preparations in the event of a cut in Russian gas supplies and look at adjusting the electricity market. (Reporting by Philip Blenkinsop; editing by Alexander Smith)

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This post EU plans to tackle spikes in energy prices, possible shutdown of gas in Russia

was original published at “https://financialpost.com/pmn/business-pmn/eu-makes-plans-to-tackle-energy-price-spikes-any-russian-gas-cut-off”