Neither the rise in energy prices that began a year ago due to the shortage of gas in the market has been a temporary phenomenon, as Europe responded to Spain, Portugal and Italy at the time, nor is it an exclusive problem of the south or the continental periphery.
The unprecedented rise in prices recorded in recent weeks as a result of the gradual closing of the tap that carries Russian gas to Europe has set off all the alarms in Brussels and other capitals that until recently were reluctant to question the system for setting electricity rates. The current model's days are numbered, the European Union warned Moscow yesterday in the midst of an energy war following the invasion of Ukraine.
“We are working on an emergency intervention and a structural reform of the electricity market” to avoid being victims of “Russian energy blackmail”, announced the president of the European Commission, Ursula von der Leyen, finally in tune with the concerns of the south of Europe but also with the urgent calls for help launched now from Germany, Belgium and Austria to take urgent measures to lower the electricity bill that consumers and industry bear. With millions of workers suffocated by the cost of energy and inflation, European unions are preparing mobilizations to protest the loss of purchasing power.
All the initiatives and options that the EU is considering, which largely coincide with the proposals put forward with mixed success by Spain and Portugal in Europe, have the same objective: "To separate the price of electricity from gas and thus prevent Putin from dictating the energy prices with their gas supply shenanigans,” said Jozef Sikela, the industry minister of the Czech Republic, which holds the rotating presidency of the EU Council this semester.
The main measure in which Brussels and Prague are working to quickly reduce the impact of the gas shortage on the price of electricity (it is its main determinant, although in reality it has been produced by cheaper nuclear or renewable energy) is to extend the EU as a whole the so-called “Iberian exception”, the gas price cap negotiated by Spain and Portugal last spring to mitigate the impact of the price escalation. According to this mechanism, which in principle will be in force for six months, it is the State that pays the difference between the fixed limit and the market price; Belgium plans to adopt something similar on its own this week.
But the EU is now planning to go further and is openly talking about adopting a reform that would definitively break that link. "The exorbitant prices of electricity show the limits of our electricity market system", Von der Leyen admitted during his speech at the Strategic Forum in Bled (Slovenia) which every year kicks off the European political course. The current system "was designed under very different circumstances and for very different purposes," he said of a system designed 20 years ago to incentivize investments in renewable energy.
The president of the European Commission, who was very skeptical a year ago of the proposals from Spain and Portugal, has progressively changed her opinion about the nature of the problem. After months of denying that she was in the market structure, in June she was for the first time open to reforming the electricity pricing system and she asked the leaders of the Twenty-seven to debate the matter in October. The unprecedented course that energy prices have taken this summer has rendered such a calendar obsolete.
The Czech presidency of the EU yesterday convened an extraordinary council of European energy ministers to study the situation and adopt measures based on the proposals that the Community Executive adopts in the coming days. The appointment will take place on September 9 in Brussels and wants to be a meeting in which decisions are made. "The European energy market no longer works, we must fix it," said the Czech minister.
The intense contacts between capitals over the past weekend have borne fruit and there is consensus on the need to make structural changes. “We are going to have to decouple” the price of electricity from gas, von der Leyen said a few hours later during a debate in Berlin, where he met with German Vice Chancellor Robert Habeck to address the issue.
The German government, a coalition of social democrats, liberals and environmentalists who have agreed to return to coal to weather the crisis and are debating whether to extend the life of their nuclear power plants, has become a demanding party to the reform. “We are going to seriously examine what instruments to use to lower electricity prices. It is not something that can be done without thinking, it has to work from a technical point of view, but it is clear that what is happening with prices is not a real reflection of demand and supply," Foreign Minister Olaf Scholz said yesterday. while the wholesale cost of electricity in Germany for 2023 exceeded 1,000 euros/MWh for the first time, a record price that doubles that registered two weeks ago.
