EU revolt: Five countries break ranks as bloc’s security ‘jeopardised’ by new policy

Surging energy and fuel costs push inflation to near-decade high

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Energy ministers from the bloc met last Thursday as the bloc’s energy crisis persists, with bills remaining high although they have dipped from the record numbers that peaked in October. And with gas supplies tightened, storage levels low and a cold winter ahead, the high gas prices are also driving up electricity prices as a result of the “marginal” production capacity available to fire up power plants at short notice to meet peak demand.

But some EU member states, including France and Spain, argue this power pricing mechanism is not fair as it does not reflect their own energy mix, dominated by cheap low-carbon electricity coming from renewable sources or nuclear power stations.

Others have argued that this overhaul to the current system could “jeopardise affordability and security of supply”.

The EU rebels, including France, Greece, Italy, Romania and Spain, signed a paper ahead of talks last week which said that energy prices must “reflect the costs of the generation mix used to serve their consumption”.

The paper added: “We must act in the short term in order to ensure that consumers perceive the benefits of zero-emissions technologies in prices signals while protecting them from the increasing volatility of natural gas markets.”

These EU rebels are demanding an amendment to the EU’s electricity directive, calling for reforms that will allow consumers “to request a supply offer that protects them from short-term electricity price variations”.

They also called for warnings to consumers who are on a dynamic price contract.

The EU’s Electricity Market Glossary defines this as ‘an electricity supply contract between a supplier and a final customer that reflects the price variation in the spot markets, including in the day-ahead and intraday markets, at intervals at least equal to the market settlement frequency”.

The rebels argue that an absence of these warnings might “lead consumers to take risks they cannot manage, or at least risks they are not aware of”.

But the EU has pushed back against the revolt, arguing that wholesale electricity markets are functioning well at the moment and should not be interfered with.

The EU’s energy chief Kadri Simson said after a ministerial meeting held in October: “Changing the current model poses risks to market predictability, competitiveness and our clean energy transition.”

Earlier this month, the European Commission toolbox of policy measures which suggested short-term measures EU countries can take in order to protect vulnerable consumers from energy price spikes, such as tax breaks and support schemes for the poor.

Before last Thursday’s meeting, a group of nine EU countries supported the Commission’s stance, saying the current energy price spike must be addressed “within the current European framework for climate and energy”.

A paper signed by Austria, Denmark, Estonia, Finland, Germany, Ireland, Latvia, Luxembourg, and the Netherlands, said: “We agree with the European Commission that in the short term, the price hike can be best addressed through temporary and targeted national actions by member states…to protect vulnerable consumers and businesses.

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“We cannot support any measure that would represent a departure from the competitive principles of our electricity and gas market design.

They warned that any deviation from these “would undermine the cost-effective decarbonisation of our energy system and “jeopardise affordability and security of supply”.

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