Commission report: Emergency energy measures facilitated market improvement

In a report on the review of emergency interventions to address high energy prices submitted to the Council today, the Commission finds that the temporary, emergency measures introduced for the energy market at the end of last year – electricity demand reduction measures, infra-marginal revenue cap, and retail price setting rules – contributed to a calming of the European energy markets, alongside the other emergency proposals adopted in 2022. The report also concludes that as the EU electricity market supply and prices have now changed considerably from the record high levels last year, a prolongation of these emergency measures does not seem necessary or advisable at the current time. The Commission confirms that it will not propose a prolongation of these crisis measures. At the same time, the report recalls that certain aspects of these rules have been included among the longer-term structural adjustments in the electricity market design proposals tabled by the Commission in March. 

The report notes that electricity prices have now decreased to less than 80 EUR/MWh and gas prices have not only fallen but also stabilised, to the extent that the electricity price spikes observed throughout 2022 are considered ‘less probable to occur in the upcoming winter’.    

With respect to the electricity demand reduction measures, each EU country implemented measures to reduce electricity demand, such as through awareness-raising campaigns and targeted energy-saving measures. EU countries reported that they broadly respected the binding target of reducing electricity consumption by 5% at peak hours – an important step for easing price pressure. The demand response measures that some EU countries implemented are important for well-functioning electricity markets, and therefore the Commission has put forward certain structural elements based on lessons learned from the crisis measures in its electricity market design proposal.  

The implementation of the inframarginal revenue cap varied greatly across EU countries – both in terms of the level of the cap and the time scope. The report notes that the increased stability in gas and electricity markets means prices have steadily fallen below the revenue cap level.

The report also highlights that 12 out of 25 EU countries took advantage of the possibility to widen the scope of retail price regulation in times of crisis to SMEs and apply price regulation below costs under certain conditions. For example, 7 additional EU countries introduced price regulation for households – in addition to the public intervention in price setting for households which already existed before the crisis in 11 EU countries; 4 reported having introduced regulated retail prices for SMEs, and 2 reported compensation schemes for SMEs. Several EU countries reported schemes based on consumption ceilings, including interventions in price setting or direct or indirect compensation schemes to final consumers.

Documents

• Report on the review of emergency interventions to address high energy prices in accordance with Council Regulation (EU) 2022/1854

Related links

• Electricity market design

• Action and measures on energy prices