EU and German leaders commit to reform to reduce electricity prices

BERLIN (AP) — The European Union’s chief executive and German chancellor pledged on Monday to reform the continent’s electricity market to help bring down electricity prices that have been driven to the rise by soaring gas prices.

European Commission President Ursula von der Leyen said in a speech in Bled, Slovenia that soaring electricity prices “now reveal the limits of the current design of our electricity market”.

“It was developed for different circumstances,” von der Leyen said. “That is why we are now working on emergency intervention and structural reform of the electricity market.”

The continent’s electricity market is underpinned by an “order of merit” system in which the power plants offering the cheapest electricity are operated first, but prices are determined by the most expensive power plants. expensive and the last to be exploited – at present, those using gas, the price of which has risen sharply following Russian supply cuts to several European countries amid the war in Ukraine.

German Chancellor Olaf Scholz, visiting Prague on Monday, said the question of how to redesign the European electricity market “so that we no longer have to bear these high prices that we are currently experiencing” has occupied a great deal of attention. part of his meeting with the Czech Prime Minister. Petr Fiala, whose country currently holds the rotating EU presidency. He said “we will act together quickly”.

“We need to make structural changes that help bring prices down quickly and have a sufficient supply” of electricity, Scholz told a news conference. He added that “there is a great will to change something, and it seems to me very reciprocal among the heads of state and government in Europe”.

“It is clear that what is currently being asked as a market price does not reflect supply and demand in the proper sense,” he said.

Speaking earlier in Berlin, a spokeswoman for Germany’s economy ministry said the idea was to retain the principle of the “merit order” system, “but removing the negative effects of merit order, so that high gas prices can no longer have an immediate and automatic impact on electricity prices.

The aim is for customers to benefit from cheaper generation prices for renewable energy, for example, spokeswoman Beate Baron said.


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James R. Rhodes