The electricity market in the EU and as a result the rise in electricity prices is driving debt heavily

Rising gas prices have raised electricity bills across Europe – and exposed the EU’s electricity market.

The way prices are set has been burned not only from member states – by Spain and France leading to call for change protecting consumers from damage – but from Russia, where President Vladimir Putin blames rising gas prices is probably the EU’s idea of ​​ending a long-term agreement in favor of market prices.

The European Commission, however, has refused to be pressured to make major changes to the 30-year-old electricity market in the EU. Brussels has published a “toolbox” of options to address inflation, such as direct financial and tax support but has not promised a change in pricing laws.

Kadri Simson, EU Commissioner for Electricity, said he defended the order by opening the way for market release and promoting investment in green technologies.

Why is the price of electricity going up?

Central European energy tariffs are converted into taxes and VAT (approximately 35%), network operating costs (30%), and energy unit (about 35%), according to figures from the EU Agency for the Cooperation of Energy Regulators ( ACER).

What worries me most from other countries is the EU’s electronic approach. It works on a typical “pay you clear” model where electronic payments reflect the value of the final installments purchased in the member markets.

Gas is often the fuel that is needed to ensure that it gives us enough energy to meet our needs.

As a result, even in countries such as France – where low-cost nuclear energy supplies about 70% of the electricity – air is still at a premium. And as oil prices rise, so does oil prices.

Who benefits from the way the market works?

The EU energy market has helped reduce prices in Europe since the late 1990s by shifting from a long-term oil-like partnership to a non-carbon dioxide gas and commodities that can be sold in the same markets.

Because prices are stabilizing due to fluctuations in demand and demand, Europe has been experiencing severe prices – especially since the start of the Covid-19 epidemic in 2020 – while greater availability has grown. Between 2019 and 2020, European households experienced a 20% drop in oil prices, according to Eurostat figures.

Jan Cornillie, a researcher at the European University Institute, said the EU electricity market “provided very low prices for many years” but the recent agreement – especially those that cannot be monitored by policymakers – means “this is the first time it has not worked on our behalf. ”.

“The study is not undermining its overall design but is expanding insurance coverage at a time of high cost,” says Cornillie.

Brussels also strongly defends the nation which it says is necessary to achieve its climate goals and accelerate the transformation of renewable energy.

Side prices mean that all retailers in the market, including low wind or solar panels, receive a paid price at the lowest possible price, and provide access to major technologies such as renewable energy. “The market is not dominated by big players and is open to setting up smaller ones,” Simson told the Financial Times.

Is there another way?

Finance ministers from France, Spain, Romania, Greece and the Czech Republic have called for major changes in order to “improve the relationship between the price paid by consumers, as well as the average cost of electricity in the production of all species”.

The Commission has promised to look into how such “neglect” can be achieved.

EU Energy Commissioner Kadri Simson

EU Energy Commissioner Kadri Simson said the plan has paved the way for market access and promoting the sale of green technology © AFP via Getty Images

But the desire for big change is low. Changing middle prices is also a waste of time in the EU. Many member states including Germany, the Netherlands and the Nordics are expected to reject the legislative change in price changes that experts say is expected to disappear early in 2022.

“Until [the price surge] it’s a temporary thing, then the response has to be temporary, “Christian Zinglersen, director of ACER, told FT.

Can good electrical wiring make any difference?

One solution Brussels is working on is finding ways to strengthen the EU’s ability to access and conserve natural gas to be available to change prices at a critical time. “Instability is possible to stay here and we need to make an effort to accept this,” Zinglersen said.

Only about 12 countries have their own oil reserves.

In contrast, the EU already has strict rules on emergency fuel: each member is required to store less than 61 days of fuel and use it continuously in Brussels.

But ways to establish an EU gas procurement and storage agreement must face technical challenges and rising costs. Natural gas is stored in secret storage areas and the market is controlled by traders, including Russian Gazprom.

“Only a handful of countries can afford to have adequate savings, and I have raised the difficult question of how to allocate funds,” said Christian Egenhofer and Irina Kustova at the Center for European Policy Study.

Energy Commissioner Simson on Wednesday said Brussels would offer a “free” idea by keeping and buying together, encouraging countries that want to participate, but not make the right laws.

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