MNI: EU Said To Draft Electricity Reform Before Crisis Meet

The European Commission is working on a proposal to reform the 30-year-old design of the bloc’s electricity market ahead of a Sept. 9 emergency meeting of energy ministers, after Germany and Austria joined France, Italy, Spain and Portugal in applying intense pressure in favour of change, EU officials said.

Officials expect a draft reform aimed at decoupling the retail electricity price from gas prices by the end of this week, to be discussed by EU ambassadors and then by the EU’s Energy Working Party next week.

Existing market mechanisms have led to soaring electricity prices for consumers and businesses and windfall profits for energy companies, despite the fact that prices for renewable energy have been much lower than for gas.

GERMANY ADDS TO CLAMOUR

A so-called Iberian Solution’ which would have capped gas prices at EUR40-50 per MWH, has been mooted and rejected as too customised for the specific situation of Spain and Portugal, both of which have a very different energy mix to the rest of the EU and little interconnection to the rest of the Union’s electricity market, officials said.

Germany and Austria have recently joined France, Italy, Spain and Portugal in pushing for reform. In public Germany continues to stress that it is well prepared for winter, with gas storage levels now well over 80% of capacity, but Russia’s latest announcement of a three-day maintenance closure of Nordstream 1 has renewed concerns. (See MNI INTERVIEW: EU Ahead Of Target In Winter Gas Build-Up)