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More competition and engaged consumers in the internal electricity market – the EU Council reaches general approach

18.12.2017
Minister Kadri Simson at Brussels at the energy minister' Council's morning doorstep interview. Photo: Tauno Tõhk/Government Office
Minister Kadri Simson at Brussels at the energy minister' Council's morning doorstep interview. Photo: Tauno Tõhk/Government Office

On 18 December, the EU's energy ministers reached a general approach (negotiation position) on a directive laying down the common rules to ensure that the internal electricity market in the EU is competitive, consumer-centred, flexible and non-discriminatory.

The directive, which is part of the clean energy package, puts special attention on consumers and the importance of a well-functioning internal market. It gives more rights to customers, provides a balanced solution for the regulated prices, designs the regulatory framework for energy communities and defines market participants' roles and responsibilities.

Customers are our main priority in this legislation. Our aim is a competitive market that will ensure affordable electricity for all, but we will also give the governments the option to help in case that is necessary. On the other hand, the consumers will have the tools to be active and engaged and make informed decisions. This ensures that the electricity market really delivers for the European people.

This general approach will enable the Council to enter negotiations with the Parliament next year. The position of the Council, which builds on the Commission's proposal, contains the following key elements:

In the future electricity market, electricity suppliers will be able to set prices freely. This will limit distortions, boost competition and lead to lower retail prices. Member states will be able to regulate prices temporarily during limited periods to assist and protect energy poor or vulnerable household consumers. A number of market safeguards will be put in place to avoid cross-subsidies and discrimination of market participants, ensuring that the (cross-border) functioning of the wholesale market is not distorted.

Additionally, member states will ensure that the national regulatory framework enables electricity suppliers to offer a dynamic electricity price contract. By proposing these contracts and other tools such as smart meters, customers will be empowered and will become more engaged and active on the market. The agreement includes specific rules for the installation of smart meters, which are devices for measuring electricity consumption in real time.
A framework describing the role, functioning and treatment of the energy communities has been established to make sure that they contribute in an adequate and balanced way to the overall cost sharing of the system.

Regarding energy storage facilities, member states will allow, under certain conditions, both distribution system operators (DSOs) and transmission system operators (TSOs) to own, develop, manage or operate them. Public consultations will be carried out in order to assess the potential interest of market parties in investing in those facilities. The task of performing these consultations will be entrusted to DSOs together with the National Regulatory Authorities (NRA).

Timeline and next steps
 

On 30 November 2016, the Commission submitted the clean energy package, including a legislative proposal for a revised directive on common rules for the internal market in electricity.

The package as a whole was presented at the Energy Council meeting of December 2016. EU ministers had a first exchange of views on the entire package in February 2017 and analysed the progress made on electricity market design, governance of the Energy Union and renewable energy in June 2017.

With this position, the Council is prepared and hopes to start negotiations with the Parliament as early as possible next year.

Background


On 30 November 2016, the Commission presented the 'Clean Energy for all Europeans' package, aimed at implementing the 2015 strategy for an Energy Union with a forward-looking climate policy.

Four of the eight legislative proposals in the package seek to redesign the EU's internal electricity market. Apart from this directive, it includes revised regulations on the internal electricity market and on a European Agency for the Cooperation of Energy Regulators (ACER), as well as a proposal for a new regulation on risk-preparedness in the electricity sector.

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