EU: The reform of the electricity market is in public consultation – The aim is to protect consumers

The European Commission is launching a public consultation on reforming EU electricity market design to better protect consumers from excessive price volatility, support their access to secure energy from clean sources and strengthen market resilience .

The current system has created an efficient, well-integrated market for many years, allowing the EU to reap the economic benefits of a single energy market, ensuring security of supply and promoting the decarbonisation process. However, some weaknesses have been identified in the system. In the current crisis of high and volatile electricity prices, the financial burden has been shifted to end consumers. Reform is therefore needed to better protect households and businesses from high energy prices, increase resilience and accelerate the transition set out in the European Green Deal and the REPowerEU.

“The EU electricity market has served us well for more than twenty years. However, the unprecedented energy crisis we face demonstrates the need to future-proof our electricity market design so that it can deliver the benefits of affordable clean energy to each of us. I look forward to input from a wide range of stakeholders that will drive our legislative proposal this year,” said Energy Commissioner Kadri Simpson.

It is vital that all Europeans, from large industrial consumers to SMEs and households, benefit from the growth and low operating costs of renewables, notes the Commission.

Ensuring immediate access to affordable clean energy for all consumers will require market tools to achieve more stable prices and contracts based on the true cost of energy production.

The consultation launched today will support the Commission’s work on a legislative proposal which is expected to be tabled in the first quarter of this year. The consultation will run until 13 February and focuses on four key areas:

*Reducing the dependence of electricity bills on short-term fossil fuel prices and boosting the development of renewable energy sources

*Improving market functioning to ensure security of supply and fully exploit alternatives to natural gas such as storage and demand response

*Strengthening consumer protection and empowerment

*Improving market transparency, oversight and integrity

Since the summer of 2021, energy prices have experienced unprecedented increases and volatility, and have had a severe impact on households and the EU economy. To mitigate the impact of these market dynamics, the Commission has proposed and Member States have agreed a wide range of emergency measures to address high energy prices while ensuring security of supply.

The European Council called on the Commission to speed up its work on the structural reform of the electricity market, with the dual aim of securing European energy sovereignty and achieving climate neutrality. The planned reform of electricity market design was announced by Ursula von der Leyen in her annual State of the Union address last year and is included in the Commission’s work program for 2023. The outline of the improved electricity market design was presented to ministers by Energy Commissioner Kadri Simpson to the Energy Council on December 19.

RES-EMP

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