How consumers should be protected from high electricity prices

Electricity customers in the EU should be better protected from price fluctuations in the future. Members of the European Parliament agreed on a reform of the electricity market in Brussels on Thursday. This means that consumers should have the right to both fixed-price contracts and contracts with dynamic prices. EU countries can also prohibit suppliers from turning off electricity to defaulting customers.

The core element of the reform are the “Contracts for Difference” – new long-term contracts between governments and electricity producers. With these contracts for differences, states guarantee electricity producers a minimum price for electricity if they make new investments in renewable energies or nuclear power. If the market price falls below an agreed price, the state steps in and makes up the difference. If the price is higher, the surplus goes to the state. This is intended to create incentives for the domestic production of clean electricity.

Due to extremely high electricity prices, calls for a reform of the European electricity market had become loud. The reason for the high prices was, among other things, exploding gas prices due to the Russian war of aggression on Ukraine. It was also noticeable that around half of France’s nuclear power plants temporarily failed.

The basis for the agreement that has now been found was a legislative proposal from the EU Commission from the spring. The EU states still have to agree to the project, but this is considered a formality.

Also read:

For the energy transition, Luxembourg must invest hundreds of millions in its networks