An electricity subsidy proposal put forth by the European Commission, essentially seeking to replace universal subsidies offered by EU member states such as Greece with a two-tier system prioritizing subsidies for low-income households, is on the agenda of a Eurogroup meeting in Brussels today.

According to the Brussels proposal, any electricity tariff increases will be fully covered through subsidy support offered to consumers in the top-tier subsidy category for low-income households.

The second-tier subsidy group, which would include medium and high-income consumers, would offer gradually increasing subsidies, as long as consumers have proven records of reduced energy consumption.

The Greek government has implemented an electricity subsidy system based on energy consumption levels. Subsidy amounts for households are reduced if monthly energy consumption levels exceed 500 MWh.

This consumption-based system was chosen by Athens as a result of low income levels in general and higher electricity prices in Greece compared to many other EU member states.

Acceptance and implementation of the Brussels proposal would result in higher electricity costs for medium-income groups. However, the Brussels proposal faces major obstacles as each EU member state has its own subsidy-related electricity market conditions to deal with.

Greek energy minister Kostas Skrekas, in comments offered to media over the weekend, ascertained the country’s existing electricity subsidy program for households and businesses will continue to apply until at least July.