Big Energy hits jackpot on electricity market reform
Speaking after today’s European Commission proposals to reform Europe’s electricity market, Left MEPs have voiced their frustration at the Berlaymont’s relentless failure to take action to defend Europeans footing the bill for the continent’s energy crisis, and its refusal to challenge a system delivering vast amounts of cash exclusively to Big Energy corporations.
“Today’s proposal praises the EU electricity market, stating that ‘it has worked well so far’. Has it? Millions of families have seen their livelihoods destroyed while Big Energy companies hit the jackpot” – MEP Cornelia Ernst (Die Linke, Germany) comments on the draft proposal of the Electricity Market Design. “Last July, Commission President Ursula von der Leyen came to the European Parliament to announce that the energy market was not fit for purpose and promised a thorough reform. What the Commission is proposing today is nothing of the sort.”
The most ambitious measures circulating in previous non-papers which pointed to fixing prices closer to production costs, and introducing some sort of windfall profit tax have disappeared. The “structural reforms” promised by von der Leyen have turned into simple adjustments. The massive lobbying by Big Energy has brought home its results: the merit order principle which fixes electricity prices and pegs them to the most expensive energy source remains intact.
“If the overall objective of the electricity market reform is to bring bills down, accelerate decarbonisation and ensure energy security, it is striking that the marginal price setting mechanism for wholesale markets is lauded and remains in place. The EU will continue to allow expensive and dirty fossil fuels to set the price of electricity” says MEP Sira Rego (Izquierda Unida, Spain)
The Commission’s proposal introduces some measures to protect vulnerable consumers from disconnections. This was one of The Left’s key demands during this energy crisis and will continue to be a priority for The Left as soon as the text will arrive to the European Parliament.
The Commission chose not to touch the wholesale market and its functioning, but decided to regulate long-term contracts. A measure that risks producing a two-speed Europe by privileging member states that have sufficient liquidity to afford massive subsidies.
Another novelty in the Commission proposal is the possibility of public intervention on prices in times of energy crisis. It will be up to the Commission to declare “the energy price crisis” and one of the key conditions will be that the prices at the wholesale market need to be more than two and half times higher than the average price during the previous five years. In this case suppliers will be compensated for providing electricity below market price. So rather than changing the price setting mechanism public money will continue to fill in the coffers of Big Energy.
“The failure of the Union’s energy market is before our eyes. Millions of people across Europe have felt it in their cold homes or when deciding whether to heat their homes or do their shopping. Big energy companies and their shareholders felt it as well, dividend after dividend.. What more does the Commission need to realise that we must reverse course?” concludes MEP Marisa Matias (Bloco de Esquerda, Portugal)
Related Meps and Contact person
- DIE LINKE.
- Bloco de Esquerda
- Izquierda Unida