Policy & Regulation

27 Oct 2021

Nine EU Partners Reject French-led Electricity Reforms

27 Oct 2021  by AFP   

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

"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.

France wants a decoupling of electricity prices from gas prices as it sees as unfair the difference between what consumers are having to pay compared to the "ultra low cost" of nuclear energy.

"This will not be a remedy to mitigate the current rising energy prices linked to fossil fuels markets," read the statement from Austria, Denmark, Estonia, Finland, Germany, Ireland, Latvia, Luxembourg and the Netherlands a day ahead of an emergency meeting of EU energy ministers.

Earlier in October, France's and Spain's finance ministers urged reform of the bloc's wholesale electricity market, including the regulation of tariffs as prices shoot ever upward.

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" toward 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 in October.

Gas prices currently help to fix a price across the bloc-wide electricity market.

The European Commission says that it is happy with its so-called marginal wholesale pricing system, which sees bloc members get the same price for the electricity they are producing while encouraging the development of renewable energy sources.

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