The European Union is preparing changes to energy taxation and grid charges aimed at reducing electricity bills for consumers, according to a draft proposal by the European Commission seen by Reuters.
The proposal includes a plan for electricity to be taxed at a lower rate than natural gas. The aim is to reduce the relative cost of electricity and accelerate the transition from fossil fuels to electricity in sectors such as transport, industry and heating.
According to Reuters, the initiative is part of the EU's response to the effects of the war in Iran on energy markets, which has led to a rise in oil and gas prices. This development is borne by consumers, due to the Union's dependence on imported fossil fuels.
The draft states that swift action is needed to reduce electricity bills and the EU's dependence on fossil fuels.
Under the proposal, national governments will continue to set their tax rates, provided they adhere to the general rule of lower taxation of electricity over gas.
This change is expected to enhance the competitiveness of technologies such as electric cars and heat pumps, reducing the cost of using electricity compared to conventional fuels.
The draft also foresees that Member States should incentivise consumers to switch energy use to times of the day when electricity is cheaper.
According to the text, network users should be encouraged to behave in a system-friendly manner, adjusting or transferring their consumption to times and areas where the cheapest energy sources are available.
To this end, the EU is expected to set a target of 50% of electricity consumers having a smart meter by 2030. Smart meters will allow consumers to monitor their consumption and take advantage of cheaper off-peak prices.
Network charges, i.e. the charges levied by operators for operating and upgrading networks, account for around a quarter of the electricity bill of an average household in the EU.
The proposed changes to taxation will need the approval of MEPs and a reinforced majority of member states. However, European diplomats said some countries were reacting to the plans, arguing that the tax changes should be approved unanimously.
The same countries warn that this process could set a precedent for the faster promotion of similar measures in the future.
The draft proposal is expected to be published on July 22, while a spokesman for the European Commission declined to comment, according to Reuters.
