European Parliament passes electricity market reform: What will change for consumers?

European Parliament passes electricity market reform: What will change for consumers?

The reform of the European electricity market was approved by the European Parliament in Brussels. This reform is intended to ensure that electricity customers in the EU will be better protected from price fluctuations in the future. The agreement provides that consumers have the right to fixed price contracts as well as dynamic price contracts. Furthermore, EU countries can prohibit suppliers from switching off the electricity to defaulting customers.

A central element of this reform are the new long-term contracts between governments and electricity producers, known as Contracts for Difference. These contracts guarantee electricity producers a minimum price for electricity when they make investments in renewable energy or nuclear power. If the market price falls below an agreed price, the difference is made up by the state. In the event of a higher price, the surplus goes to the state to incentivize domestic production of clean electricity.

The need to reform the European electricity market arose from the extremely high electricity prices in recent months. This was compounded by skyrocketing gas prices due to Russia's war of aggression in Ukraine and nuclear power plant failures in France. The legislative proposal for this reform was presented by the EU Commission in the spring and has now been approved by the European Parliament. The consent of the EU states is seen as a mere formality.