ATHENS, (Reuters) – Greece announced Monday that the European Commission had initially approved the scheme it used to fix a limit on wholesale electricity prices in order to reduce the effects of rising energy costs on businesses and households.

Athens subsidises power bills, and offers grants for vulnerable individuals at 4 billion euros ($4.27 trillion) each.

Surging electricity and gas prices, aggravated by Russia’s February 24 invasion of Ukraine, have led to inflated power bills for Greek customers. Athens announced a limit on wholesale electricity prices starting in the summer.

“Today, I’ve made an important step by first agreeing upon the new mechanism that will take effect on the electricity market starting in July,” Kostas Skrekas (Greek Energy Minister) said after meeting Kadri Simonson (EU’s energy commissioner), in Brussels.

Statement said that the scheme would include a cap on payments made to power producers in order to reflect their production costs. However, it will not violate EU’s common powers markets rules. The goal of the scheme is to disconnect rising gas prices from high electricity prices.

The statement also stated that Greece would notify the European Commission next week of the proposed legislation describing the new mechanism.

Athens stated that it would use the revenue from carbon emissions permits to fund the scheme.

($1 = 0.9361 euro)