Status: 03/14/2023 3:07 p.m
Electricity customers in Europe should be significantly relieved by the forthcoming electricity price reform. The EU Commission is planning long-term fixed prices that are to be guaranteed by the state.
The planned reform of the European electricity market should give consumers better protection against drastic price increases. This emerges from drafts that were presented today.
Fixed contracts with stable prices
According to the drafts, the Commission is in favor of securing consumers with more fixed contracts with stable, long-term prices. “At the heart of this reform are consumers,” European Commission President Ursula von der Leyen told the media ahead of the plans’ presentation in Strasbourg this afternoon.
In the past year, energy prices have skyrocketed as a result of Russia’s war in Ukraine and the Russian gas supply freeze. According to the plans, the electricity producers should receive fixed purchase prices regardless of short-term price developments. The purchase prices could be secured by the state with guarantees.
Decouple the price of fossil fuels
Electricity generation from fossil fuels such as coal and gas should not receive these guarantees. Instead, the expansion of renewable energies should be further promoted. Gas is also said to play a lesser role overall. The electricity price is currently calculated according to the last power plant that is needed for the current demand (“merit order” principle). These are often expensive gas power plants.
The drafts can still be revised, and the EU states and the European Parliament must also agree. Countries like Spain and France have called for more intervention to stabilize prices. Other countries, including Germany and Denmark, have warned against making too big changes to scare off investors. In Germany and France there are already state price brakes for electricity.
Reform before the European elections?
Von der Leyen expressed confidence that, despite German objections, a decision could be reached before the European elections in May next year. The reform will “drastically reduce the impact of the gas price on the price of electricity,” said the President of the Commission. In return, “consumers could benefit from cheaper renewable energies”.
Federal Economics Minister Robert Habeck (Greens) recently spoke out against a far-reaching restructuring of the electricity market before the European elections. Six other EU countries support this course, including the Netherlands, Denmark and Luxembourg. Once the EU Commission has presented its plans, they go to the European Parliament and the member states for consultation.
In Germany there are already state price brakes for gas and electricity. This is intended to protect consumers from excessive energy costs.