EU greenlights energy market reforms to protect consumers and boost stability

Belgian Energy Minister Tinne Van der Straeten said the EU aims to strengthen the position of consumers, ensure the security of supply, and pave the way to a more stable energy market. During Tuesday's ministerial meeting in Brussels, the EU finally approved the energy market reform.

Thanks to the reform, consumers will be better protected against risks related to energy supply and prices. They can change suppliers more easily, use effective price comparison tools, receive accurate, reliable, and transparent billing information, and gain better access to data and new smart technologies. The new regulations also aim to stimulate the EU's hydrogen market and other decarbonized gases.

One of the reform's significant elements is the promotion of long-term contracts with electricity producers. Difference agreements, a type of such contract, include a minimum and maximum price, thus providing financial stability to producers while preventing them from making extraordinary profits in the event of price increases. Under such a contract, a public body compensates the energy producer's losses if market prices fall too sharply but takes profit if prices exceed the agreed maximum price.

Thanks to the reform, the EU will also gain additional tools to respond to sudden increases in energy prices. The European Commission will be able to declare an energy crisis, allowing member countries to launch aid programmes.

The new regulations also allow for blocking Russian LNG, which is still being imported into EU countries. Community country governments can exclude Russian and Belarusian exporters from bidding to supply gas and LNG to EU countries.

The starting point for the reform was the energy crisis that the EU experienced after Russia's invasion of Ukraine. The Kremlin significantly limited the supply of fossil fuels to the Union, leading to an increase in prices, and European energy bills skyrocketed. For this reason, Brussels decided to change the EU energy market to efficiently respond to similar crises in the future.

Minister Tinne Van der Straeten emphasizes that this day marks a milestone for the EU on the way to an emission-free and more environmentally friendly future for all. By adopting the electricity market reform, the EU aims to strengthen the position of consumers, ensure the security of supply, and pave the way to a more stable, predictable, and sustainable energy market.

The European Commission is pleased with the final approval of the energy market reform. Energy Commissioner Kadri Simson outlined that the energy crisis has brought about significant changes in the EU's energy landscape. Once largely dependent on Russian supplies, Europe is moving towards future electricity and gas markets with no place for Russian gas, and renewable energy sources, clean gases, and hydrogen play a central role.

Negotiations on the electricity market reform between the Council of the European Union and the European Parliament began on 19 October and concluded on 13 December 2023. The reform was finalized on Tuesday.

The new regulations will come into force on the 20th day after publication and will be applied directly in all member countries.