Court upholds the Iberian gas cap

The Court of Justice of the European Union (CJEU) on 22 October 2026 rejected a challenge by five Spanish companies to the Iberian gas cap, a mechanism Spain and Portugal set up during the 2022 energy crisis to limit how gas prices fed into electricity costs. The firms were PGI Spain, Berry Superfos Pamplona, Promens Packaging, RPC Envases and Zeller Plastik España. The ruling confirms the General Court's March 2025 decision and keeps in place the European Commission's authorisation of the measure. The Commission approved the cap in June 2022. It compensated power plants running on fossil fuels, mainly gas, and was partly funded by a contribution from certain electricity buyers. Buyers that had signed fixed-price contracts before 26 April 2022 and met the requirements were exempt from that contribution.

The five companies argued that their own financial contracts, used to hedge against electricity price rises, should also have exempted them. They bought power through suppliers and held financial contracts with other firms to offset gaps between market prices and agreed prices, a structure they said left them unfairly excluded. The CJEU found they had not shown that the Commission knew their particular circumstances when it approved the measure.

Advocate general backs the 2022 windfall levy

On the same day, Advocate General Athanasios Rantos gave an opinion that the 2022 temporary solidarity contribution on excess profits complies with EU law. The levy covered extraordinary profits made in 2022 and 2023 by companies in oil, natural gas, coal and refining, where those profits exceeded by 20% the average taxable profits of the previous four years. Rantos found that article 122 of the Treaty on the Functioning of the EU provided a valid legal basis, because the measure was urgent, temporary and proportionate. Given its exceptional and temporary nature, he said both the EU regulation and the national measures based on it remain legitimate. He also found the levy was not retroactive, did not breach property rights or the freedom to conduct business, and was neither a customs duty nor state aid.

Member states may extend the contribution to other companies with exceptional energy profits, as long as the overall burden and objectives stay equivalent to those set in Brussels. Questions came from the Constitutional Courts of Belgium and Italy and from Ireland's High Court. The underlying cases involve Varo Energy Belgium, Vermilion Energy Ireland and the Italian company Acea Produzione. An advocate general's opinion is not binding, although its conclusions usually match the final judgment, and the court has yet to rule on the referred questions.

Levy debate resurfaces in Spain and Italy

The opinion comes as Spain and Germany have called for a similar levy on oil companies' windfall profits, a proposal the European Commission rejects. Spain's 2022 levy stayed in force until 2024. In Italy, the debate over the budget (manovra) has turned to extraordinary levies on energy companies. Elettricità Futura said its members had already contributed several billion euros through a recent increase in the regional tax on productive activities, advance payment of system charges and aid for households with an ISEE indicator of up to 25,000 euros.