Nine EU countries reject Franco-Spanish push for electricity reforms

France wants to see a decoupling of electricity prices from gas prices, seeing as unfair to consumers the difference between what they are having to pay compared to the "ultra low cost" of nuclear energy. [Image by Ed White from Pixabay]

Nine EU states, including Germany, on Monday (25 October) rejected a French-led bid to reform Europe’s wholesale energy markets as prices soar.

The nine countries – Austria, Denmark, Germany, Estonia, Finland, Ireland, Luxembourg, Latvia and the Netherlands – argue that there should be short term measures to help the most vulnerable through the price hike, but that Europe should refrain from far-reaching reforms of its energy market.

“As the price spikes have global drivers, we should be very careful before interfering in the design of internal energy markets,” the nine said in a joint statement.

“We cannot support any measure that conflicts with the internal gas and electricity market, for instance, an ad hoc reform of the wholesale electricity market,” the statement says. “This will not be a remedy to mitigate the current rising energy prices linked to fossil fuels markets,” they add.

Instead, the group pushes for further integration of EU energy markets, and reaching the EU target of achieving 15% electricity interconnection by 2030.

EU energy ministers are gathering today (26 October) in Luxembourg for an emergency meeting to discuss soaring energy prices and the European Commission’s proposed “toolbox” to tackle them.

The meeting follows an EU summit last week where the bloc’s leaders debated rising energy prices.

France and Spain have called for decoupling electricity prices from the gas market, seeing as unfair to consumers the difference between what they are having to pay compared to the “ultra low cost” of nuclear energy and renewables.

French Finance Minister Bruno Le Maire has complained previously that the EU pricing system gives gas a disproportionate influence on the setting of wholesale electricity prices, pushing them higher in recent months as winter nears.

Le Maire appealed to the bloc to review from top to bottom the functioning of the electricity single market, judging its current rules “obsolete.”

But, without singling out Paris, the nine said they “cannot support any measure that conflicts with the internal gas and electricity market, for instance an ad hoc reform of the wholesale energy market.”

The nine said competition between different fuel sources contributes “to innovation, security of supply and are thus a key element to facilitate the transition” towards low-carbon emissions.

The European electricity market “has functioned well for 20 years with truly competitive prices… To interfere could be extremely dangerous. That could destroy all confidence in this market,” Luxembourg Energy Minister Claude Turmes said earlier this month.

France, Spain urge pan-European response to energy price surge

France and Spain on Monday (4 October) called for a coordinated European response to the surge in global energy prices to protect Europe’s poorest citizens, the competitiveness of its businesses and its 2050 plan to cut greenhouse emissions.

Although gas only accounts for one-fifth of electricity production in Europe, gas-fired power plants have become price-setters on the electricity market because they can be fired up at short notice to respond to demand peaks.

“If electricity prices are high, it is because of the high gas prices, and we have to look at the possibility to decouple within the market because we have much cheaper energy like renewables,” Commission President Ursula von der Leyen said during a visit to Estonia on 5 October.

Yet, the Commission is reluctant to reopen the EU’s electricity market directives, which were revised almost three years ago. Rather, it proposed deepening cross-border regional cooperation on retail energy markets and launching a study on electricity price formation.

Three factions

The debate on energy prices has seen EU countries break into three factions; those who want to continue with the current system and support vulnerable households in the meantime, those who wish to see reform of the energy market and those who blame the EU’s carbon market and wider green policies.

Ahead of last week’s summit, a group of mostly coal-reliant central and eastern European states have blamed Europe’s climate policies for pushing up the price of energy.

But the nine EU countries rejected those calls, saying energy efficiency measures and the accelerated deployment of renewable energy sources are the key to alleviating the price shock in the medium term.

“A well-managed energy transition is not the cause, but part of the solution to keep prices affordable and predictable,” the group insists.

The Commission also said earlier this month it wants to look into potential anti-competitive behaviour and market manipulation.

It made the announcement after gas prices reached record-breaking highs, noting electricity wholesale prices surged more than 200% between January and September, driving up retail prices as well.

EU outlines short and long-term answer to global energy price surge

The European Commission unveiled on Wednesday (13 October) a “toolbox” of measures  EU countries will be able to draw from when responding to rising energy prices in the short term, while pointing to an upcoming gas market reform for measures to be considered in the long term.

[Edited by Frédéric Simon]

Subscribe to our newsletters