The energy crisis and high electricity prices have triggered the need for a reform of the EU’s energy market. What is the Parliament calling for?
Russia’s full-scale invasion of Ukraine created the energy crisis in 2022, pushing prices to new highs. For example, the European Power Benchmark for electricity stood at €339/MWh on average in the third quarter of 2022, up 222% year-on-year.
High prices, the security of energy supply and the need to increase decarbonisation led the European Commission to propose a reform of the electricity market on 14 March 2023.
In September 2023, the European Parliament gave the green light to the start of negotiations on the reform with the Council.
Stronger consumer protection against volatile energy prices
“With this agreement, Parliament puts citizens at the centre of the design of the electricity market, prohibiting companies from cutting the power of vulnerable and at-risk consumers, promoting the right to share energy, reducing price spikes and promoting affordable prices for citizens and companies,” said Nicolás González Casares (S&D, Spain), the MEP in charge of steering the new rules on the reform of the electricity market design through Parliament.
MEPs propose to further strengthen consumer protection against volatile prices. Consumers should have the right to fixed or dynamic price contracts, as well as more information on the options. The aim is to make prices stable and to mitigate the impact of sudden price shocks.
MEPs also want EU countries to prohibit suppliers from cutting the electricity supply of vulnerable customers or requiring them to use prepayment systems.
Protect consumers from energy market manipulation
Parliament also proposes new measures to better protect the EU's wholesale energy market and to tackle market manipulation by strengthening transparency, oversight mechanisms, and the role of the Agency for the Cooperation of Energy Regulators .
"In our work, we were guided by three main principles: legal coherence and transparency, a strengthened European dimension and a reinforced market," said Maria da Graça Carvalho (EPP, Portugal), the lead MEP for these proposals.
Talks with national governments on the final form of the EU’s electricity market reform can start once the Council has adopted its position. Council already agreed on a proposal for a regulation on wholesale energy market integrity and transparency. MEPs hope to reach an agreement with the Council before the European elections in 2024.