Consumers are at the centre of the EU energy policy and a wide range of EU actions and measures aim to make consumers an active part of the clean energy transition, helping them to save both energy and money.
On top of the general consumer rights guaranteed in EU legislation, citizens also enjoy a set of energy-related rights, defined at the EU level and set out in national law. National legislation must for example guarantee consumers the right to
- an electricity connection (ensuring households are supplied with electricity from the local network)
- a choice of electricity and gas suppliers, as well as an easy and fast switch of suppliers (without extra charges)
- clear contract information and the right of withdrawal
- accurate information and billing on their consumption
The 2022-2023 energy crisis
The war in Ukraine 2022-2023 and the related crisis have caused very high costs for energy for both consumers and businesses. More families are confronted with the dilemma of whether to spend their limited resources on food or on heating. Low-income households have been hit the hardest, but for the first time in recent memory, also many middle-income households struggle to pay their energy bills.
Since autumn 2021, the European Commission has worked on a series of measures to support consumers in the face of high energy prices, building on the recognised need to provide targeted support to reduce energy demand and offer structured help to those in greatest need.
To make sure nobody was left behind in winter 2022/2023, the Commission facilitated a joint declaration to better protect consumers in December 2022 among key stakeholders representing consumers, regulators and energy suppliers and distributors. They pledged to encourage their members to implement measures, such as bill payment deferrals, protection from disconnection, minimisation of unilateral contract changes, clear information about energy prices and bills and advice on how to save energy to help consumers during the winter months.
Electricity market design rules and consumers
The Clean energy for all Europeans package, adopted in 2019, is a legislative framework that includes 8 legislative files of which 4 are collectively known as the electricity market design. These rules outline a comprehensive framework for consumer protection, information and empowerment in the EU electricity sector.
- energy bills must be made clearer so that consumers get a better understanding of their energy consumption and can better budget their expenses
- consumers should have access to at least one energy comparison tool, allowing them to find the best deal in the market and switching to another supplier should become faster
- the rollout of smart meters should be accelerated, allowing consumers to get more accurate information on their consumption
- new innovative energy services should be made available, helping consumers to save on their energy bills
- the opportunity for consumers to actively engage in renewables, either individually as producer-consumers or collectively through renewable energy communities
In March 2023, the Commission proposed a reform of the EU electricity market design, which puts consumers at its heart by supporting their stronger empowerment and protection. Through structural measures, this proposal aims to protect both consumers and suppliers from price volatility, as well as to provide greater contract choice and direct access to renewable energy.
More stable and affordable energy prices
Renewable energy sources are by far the cheapest on the market, but even though they are the largest component of the EU electricity mix, final consumer bills have not reflected this fact. Therefore, the Commission proposes that consumers should be offered a variety of contracts to choose from, better matching their needs and reaping the potential of renewables. For example, a consumer might opt for a fixed-price contract to ensure predictable costs for their main household needs, while choosing a dynamic price contract for their heat pump or to charge their electric car at the time of day when electricity is cheapest.
Consumers should also receive better information on energy offers before signing up so that they can easily assess whether the offer meets their needs. The Commission’s proposal aims to facilitate access to hedging products, such as ‘contracts for difference’ and ‘power purchase agreements’ for smaller suppliers. In particular, energy communities, whether in the capacity of supplier, producer or consumer, should have access to power purchase agreements to allow them to supply their members or other final customers with their own or external production capacity.
New opportunities from renewables
Pressures created by the energy crisis prompted many individual consumers to invest in new technologies. For example, in 2022, photovoltaic installations grew by 47% and heat pumps increased by 38% compared to 2021.
In addition, the high prices experienced by consumers during the energy crisis generated greater levels of interest among consumers in joining energy communities to help control their energy bills by directly accessing and using renewable energy sources.
Under the energy sharing concept proposed in the reform, consumers will be able to access more easily off-site generated or stored renewable energy. This will help them to decouple their household electricity bills from gas prices. Consumers who engage in this type of energy sharing can deduct the electricity generated from offsite renewable generation facilities they (co-)own, lease or rent from their bill. This makes investment in renewable energy, as well as energy communities, more accessible to a wider range of consumers, including tenants and low-income families.
There will also be the possibility to share electricity generated by consumers in this way with friends, families or neighbours through peer-to-peer trading. This will allow, for instance, low-income families living in social housing to access cheaper renewable energy generated from solar panels on public buildings.
Ensuring continuity of supply
The Commission also proposes that necessary steps are taken to ensure that the most vulnerable customers are protected from disconnection in all circumstances. While many EU countries implemented measures to protect vulnerable customers in this regard during the energy crisis, the Commission considers it important to acknowledge the huge impact of losing access to electricity at any time.
Moreover, to ensure continuity of supply for consumers when a supplier fails and that consumers are well informed, EU countries will have to appoint suppliers of last resort. According to the current EU rules, this has been only on a voluntary basis and recent bankruptcies showed that the transition to a supplier of last resort was in some cases not very smooth. It sometimes led to situations where consumers were worried that they may lose access to electricity or receive very limited information on what happens with their electricity supply.
Lastly, the Commission’s proposal aims to allow EU countries, in times of emergency, to intervene in price setting for households and small and medium-sized enterprises (SMEs), below cost, for a limited period and a limited volume of electricity consumption to ensure an incentive to reduce demand.
Accessing new data-driven energy services
Access to data coming from meters, and most importantly smart meters that can support near-real-time communication exchanges, is of paramount importance for the delivery of data-driven digital services and consumer empowerment.
To facilitate this, and the overall interoperability of energy services across the EU, the Commission is mandated to develop technical rules, with the help of network operators and relevant stakeholders, for smooth access to metering data by customers who consume or produce and eligible market parties.
The first set of rules was framed under the implementing Regulation on metering and consumption data (C/2023/ 3477 final), published in May 2023. Together with the next wave of data-implementing acts, these rules will
- facilitate the easy, safe and secure flow of data to those eligible
- help better run existing processes
- incentivise the development and delivery of new energy services (energy sharing and demand response)
- promote a better and wider choice of offers for consumers
Improving consumer rights in the gas market
In December 2021, the European Commission launched the review and revision of the Gas Directive 2009/73/EC and Gas Regulation (EC) No 715/2009, referred to as the hydrogen and gas markets decarbonisation package. This package creates the conditions for a shift from fossil natural gas to renewable and low-carbon gases and strengthens the resilience of the gas system.
In order to help consumers to make sustainable energy choices and ensure nobody is left behind in the energy transition, the Commission proposed to mirror most consumer rights and protection aspects of the Electricity Directive (as described above) into the gas legislation. These include rights covering price regulation, support for vulnerable customers, or making it easier for consumers to compare and switch their energy providers.
At the same time, aiming to empower and protect consumers in retail markets, the proposal presents concrete measures to improve the clarity of contracts as well as energy bills; speed up the rollout of smart technologies that can help consumers to better understand their energy consumption and enable consumers to engage in citizens energy communities, as well as to resolve any problem they may have through the out-of-court dispute settlement.