Negotiators from the three EU institutions reached a compromise on Wednesday 19 December in Brussels on the new regulatory framework for the electricity market, which will allow Member States to keep regulated tariffs and provides for the end of coal subsidies in 2025.
The EU is thus successfully closing the last chapter of the clean energy package, proposed by the European Commission at the end of 2016.
After 17 hours of negotiations, the Austrian Presidency of the Council and the representatives of the European Parliament reached compromises on the amendments to be made to the proposals for a Directive and Regulation on the electricity market. This agreement has yet to be formally adopted by the Council and Parliament.
The new legislation aims to develop a more transparent and competitive market, while the European Commission is pursuing its policy of liberalising energy markets, which began in the 1990s.
Regulated tariffs will be preserved. In accordance with the Council's mandate, the new directive will allow countries to maintain their household price regulation policy. Member States will thus be able to regulate tariffs temporarily to help and protect energy-poor households or those in vulnerable situations. However, preference should be given to addressing energy poverty through social security systems. Member States will have to submit a report assessing the progress made in ending price regulation. By 2025, the Commission will have to present a report on progress in the EU, which may include a proposal to end regulated tariffs.
An end date for coal subsidies. A compromise was reached on an end date for public subsidies for coal under the capacity mechanisms. This scheme, designed to compensate electricity producers who maintain the necessary production capacity to meet peak consumption levels, has raised a debate on the place of coal in the Union.
An emission limit of 550 grams of fossil CO2 per kilowatt/hour of electricity is established by this. New power plants that emit more than 550 grams (g) of CO2 and start commercial production after the entry into force of the Regulation will no longer be able to participate in capacity mechanisms. Existing power plants emitting more than 550 g of fossil CO2 per kW/h and an average of 350 kg of CO2 per kW annually will be able to participate in capacity mechanisms until 1 July 2025.
The new provisions will help the EU to achieve climate objectives, while protecting investment security through a grandfather clause for capacity contracts concluded before 31 December 2019.
In addition, the establishment of regional coordination centres is another key element of the agreement. These will replace the existing regional safety coordinators, but will have additional tasks related to market functioning and risk preparedness.
MEP Florent Marcellesi (Greens/EFA, Spain) welcomed “a clear and fast end date for coal subsidies”. He regrets “that the conservative forces were able to prevent the application of the 550 gram limit to contracts quickly signed before the legislation came into force”.
Consumers will be able to better manage their invoices. The negotiated text of the Directive should enable consumers to better manage their electricity bills, for example through smart meters, and to switch suppliers more easily.
No later than 2026, consumers will be able to switch electricity suppliers in 24 hours, according to the compromise.
Consumers will be able to obtain smart meters to monitor their consumption, unless a study in a given Member State shows that the cost is higher than the benefits (they will be able to have free access to an online comparison tool).
They will also be able to choose a dynamic pricing electricity contract in all companies in the energy sector with more than 200,000 customers.
European Parliament rapporteur Arturs Krišjānis Kariņš (EPP, Latvia) said that this agreement will help in the transition to cleaner energy production and will further open up competition in the cross-border electricity market within the EU. “Parliament has succeeded in getting rid of heavy state subsidies, so that the market can do its job of supplying EU industries and households with affordable and secure energy,” he commented.
The mandate will enter into force 20 days after publication in the Official Journal. Member States will have to transpose the Directive by 31 December 2020. (Original version in French by Lionel Changeur)