Agreement on limiting post-nuclear energy bill
Limiting subsidies and lowering federal taxes should ensure that the CRM support mechanism for the construction of gas-fired power stations should not increase the consumers’ energy bill. That is the agreement the Belgian parliament came to. The breakthrough was reached through unprecedented cooperation between the MPs of Groen and N-VA.
It is not a perfect agreement. It is not clear who will have to pay for the lost income from removing the taxes that currently weigh on the energy bill. Parliament passes the question on to the government, which has to come up with proposals.
The gas-fired power stations are necessary to make up for the energy shortage when Belgium’s nuclear power stations close in 2025. The support mechanism for the construction of the gas-fired power stations proposed by the government was far too expensive.
According to the energy regulator CREG, it would cost 600 to 900 million euros a year. As a result, households’ electricity bills would rise by €100.
Energy Minister, Marie Christine Marghem (MR), did not agree with the CREG’s calculations. Yet she did not want to put a proper estimation on it. She also refused to write a Royal Decree on financing, which meant that the support mechanism had not yet received the green light from the European Commission.
The Energy Commission of the Belgian Parliament, under the impulse of Van der Straeten (Groen) and Wollants (N-VA), went looking for a solution itself. The agreement, which has broad support, means that subsidies for the construction of gas-fired power stations must not increase the energy bill.
The bottom line is that a number of federal taxes on that bill will have to be abolished. That also means that the Federal budget could go into the red even more.
By the end of this year, the government must come up with a proposal to revise and reduce this bill. The European Commission will have to approve the plans. Only then can the CRM-auction and the granting of aid for the construction of new gas-fired power stations take place.
The agreement also limits the cost of the aid mechanism: €20 per kilowatt capacity for one-year contracts, and €75 for multi-annual deals. It is expected that the cost price will be around €350 million rather than €600 to 900 million. This would add some €16 to households’ energy bills, rather than €100.
In the end, the government will, therefore, have to decide to abolish other taxes so that the energy bill does not increase. There will also be new cost estimates and measures to make extra competition possible. The government must consult Parliament on the volume of support and the conditions.
Nuclear exit, complete or partial?
The construction of new gas-fired power stations should make the planned closure of the nuclear power stations possible by 2025. But the discussion about nuclear energy is re-igniting.
For Van der Straeten, the support mechanism is an insurance policy to carry out the nuclear exit and to give a boost to investments in renewable energy. “This is a crucial breakthrough. Something the government has not succeeded in for years, the parliament solves,” says Van der Straeten.
Wollants sees this in a completely different way: “Keeping two nuclear power plants open for longer remains a perfect way to achieve the guaranteed reduction in the bill. But I’m certainly looking forward to the proposals the government has to make.” To be continued.