A top European Union executive outlined plans on Wednesday for raising more than 140 billion euros ($140 billion) to cope with an energy crisis that has increased the prospect of winter fuel rationing, corporate insolvencies and economic recession.

European gas prices have rocketed this year as Russia has reduced fuel exports to retaliate for Western sanctions over its invasion of Ukraine, leaving households struggling to pay energy bills and utilities grappling with a liquidity crunch.

"Russia keeps actively manipulating our energy market," European Commission President Ursula von der Leyen told EU lawmakers in Strasbourg, France. "So, this market is not functioning anymore."

European governments have responded with measures ranging from capping prices on consumer electricity and gas bills to offering credit and guarantees to prevent power providers from collapsing under the weight of collateral demands.

"EU member states have already invested billions of euros to assist vulnerable households. But we know this will not be enough," von der Leyen told members of the European Parliament.

She unveiled plans to cap revenues from those electricity generators that have gained from surging power prices but do not rely on costly gas. She also outlined plans to force fossil fuel firms to share windfall profits from energy sales.

"These companies are making revenues they never accounted for, they never even dreamt of," von der Leyen said. "In these times, it is wrong to receive extraordinary record revenues and profits benefiting from war and on the back of consumers." Company "profits must be shared and channeled to those who need it the most," she added.

She said the plan should raise more than 140 billion euros for the EU's 27 members to support households and businesses.

EU countries will have to negotiate the commission’s proposals and agree on final laws.

But von der Leyen's announcement did not include an earlier EU idea to cap Russian gas prices. That idea has divided member states after Russia warned it could cut off all fuel supplies.

With gas price caps off the table, at least for now, some diplomats were optimistic that deals could be struck at a meeting of EU energy ministers on Sept. 30.

Von der Leyen said the commission was "discussing" price caps and had launched talks with Norway on lowering gas prices.

Refilling reserves

Europe’s benchmark gas price rose to about 208 euros per megawatt-hour (MWh) on the comments, well below an August record above 343 euros but more than 200% up from a year ago.

Full details of the European Commission's proposals are due to be published at about 12:30 p.m. GMT. A draft of the proposals, seen by Reuters, did not include broader gas price caps.

Europe has been racing to refill its storage facilities and has already met the target to have them 80% full by November. But Russia’s moves to cut supplies, including via the major Nord Stream 1 pipeline to Germany, makes the winter outlook uncertain. Moscow blames sanctions for hindering pipeline maintenance. European politicians say that is a pretext.

"Months of geopolitical wrangling have left the European gas market whiplashed, with volatile prices stemming from lack of supply, potential market intervention, and wider uncertainty," Rystad analyst Zongqiang Luo said.

Germany’s local utility industry group VKU warned about possible insolvencies since several utilities in the EU and Britain have already collapsed as they have often been unable to pass on the full impact of gas price rises to consumers because of national price cap policies.

"We want to avoid insolvencies. I must warn that if individual companies are allowed to go bust, then it could become more difficult to finance the activities of all," VKU Managing Director Ingbert Liebing told Reuters, adding the group was in talks with the German government.

French grid operator RTE said there was no risk of a total winter blackout but did not rule out some power cuts at peak times, saying reducing demand was essential.

‘Last resort’

It said lowering national electricity consumption by 1% to 5% in most scenarios and up to 15% in an extreme scenario of gas shortage and very cold weather could help avert a power crunch.

"As a last resort, organized, temporary and rotating load shedding outages can be activated to avoid a widespread incident," RTE said.

European regulators are examining other relief measures.

"We also know that energy companies are facing severe problems with liquidity in electricity futures markets, risking the functioning of our energy system," von der Leyen said.

"We will work with market regulators to ease these problems by amending the rules on collateral – and by taking measures to limit intra-day price volatility."

Utilities often sell power in advance but must offer collateral to clearers in case of default before they supply the power. As gas prices have soared, so have collateral demands.

German utility Uniper, which has already secured 13 billion euros of credit lines from the state, most of which it has already drawn, said on Wednesday it was looking for alternative routes to keep it afloat, including possibly handing a bigger stake to the government. Under an existing bailout plan, the state will take 30%.

"Nationalization is the only solution left, Uniper’s capital resources are totally under water. Mathematically speaking, there is nothing else that could be done," a source close to the matter told Reuters.

Finland’s Fortum, Uniper’s largest stakeholder, also said talks with the German government continued.

Separately, von der Leyen said the EU was planning a deeper overhaul of its electricity market to decouple power prices from the soaring cost of gas.

She said a "deep and comprehensive reform of the electricity market" is required to reduce the influence of natural gas on the way that prices are set.

Even before Russia started its war against Ukraine, many EU member states had been calling for reform of the bloc’s energy market because they believe that the influence of gas in setting wholesale electricity prices is disproportionate.

"The current electricity market design ... is not doing justice to consumers anymore," von der Leyen said.