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DRAFT OPINION (COM(2023)0148 – C90049/2023 – 2023/0077(COD))

On the proposal for a regulation of the European Parliament and of the Council amending Regulations (EU) 2019/943 and (EU) 2019/942 as well as Directives (EU) 2018/2001 and (EU) 2019/944 to improve the Union’s electricity market design

ECON-PA-749215

Committee on Economic and Monetary Affairs · Rapporteur: Pedro Silva Pereira

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The Committee on Economic and Monetary Affairs gives its draft opinion on the Commission proposal to improve the Union's electricity market design. It asks the Commission to check that Power Purchase Agreements and Contracts for Differences do not distort or fragment the internal market and comply with State aid rules. It wants vulnerable customers, including low-income, disabled and energy-poor consumers, prioritised in the redistribution of revenues and in regulated prices. It asks that a declared electricity price crisis keep a level playing field across affected member states and that the Commission clarify how this interacts with the temporary State aid regime. It proposes amendments to the recitals and articles of Regulations (EU) 2019/943 and (EU) 2019/942 and Directive (EU) 2019/944.

Committee position. The rapporteur proposes amendments to the Commission proposal, asking the Commission to assess whether Power Purchase Agreements and Contracts for Differences distort the internal market and comply with State aid rules, to prioritise vulnerable customers, and to ensure a level playing field in electricity price crisis declarations.

Key points

  1. The proposal is part of a package to speed up renewables, phase out gas, make bills less dependent on fossil fuel prices and protect consumers from price spikes and market manipulation.
  2. The Commission adopted the Temporary Crisis and Transition Framework, a temporary State aid regime allowing subsidies to soften the impact of high energy prices.
  3. The proposal introduces Contracts for Differences and Power Purchase Agreements, and lets the Commission declare a regional or Union-wide electricity price crisis.
  4. The rapporteur asks the Commission to examine whether Power Purchase Agreements distort or fragment the internal market, comply with competition rules and have due regard to vulnerable customers.
  5. The rapporteur asks to assess whether Contracts for Differences, which add an upper and lower price cap, are consistent with State aid rules.
  6. The rapporteur wants the most vulnerable customers protected, including low-income consumers, people with disabilities and those in energy poverty.
  7. The rapporteur asks that a declared electricity price crisis ensure a level playing field across affected member states and that the Commission clarify how it interacts with the temporary State aid regime.
  8. The amendments add that the Temporary Crisis and Transition Framework is temporary and targeted, with trade-offs between clean tech financing and internal market integrity, and that a European Sovereignty Fund is planned.
  9. The amendments say the reform should benefit household consumers and enable Union industries to make clean tech investments, supported by a strong clean technology manufacturing base.
  10. The amendments require the Commission, after consulting ESMA, ENTSO for Electricity and ACER, to submit an assessment on regional virtual hubs for the forward market by 1 December 2024, with a legislative proposal where applicable.
  11. The amendments require market operators developing forward hedging products to comply with Union competition law and Directives and Regulations on financial markets, and bar member states from limiting hedging to trades within one member state or bidding zone.
  12. The amendments require member states to ensure guarantee schemes at market prices for Power Purchase Agreements are accessible to customers facing entry barriers, and to prioritise vulnerable customers in redistributing revenues from two-way contracts for difference.

Who is affected

  • Households, SMEs and industrial consumers, who should receive redistributed revenues from two-way contracts for difference, with priority for vulnerable customers.
  • Vulnerable customers, including low-income, disabled and energy-poor consumers, who should be prioritised in revenue redistribution and price regulation.
  • Member states, which must ensure guarantee schemes for Power Purchase Agreements and apply regulated prices within set consumption limits.
  • Market operators and power exchanges, which may develop forward hedging products in compliance with Union competition and financial market rules.
  • The Commission, which must assess regional virtual hubs, State aid consistency and issue guidance on the Temporary Crisis and Transition Framework.

Figures and deadlines

  • 1 December 2024: deadline for the Commission to submit an assessment on regional virtual hubs for the forward market.
  • 80% of median household consumption: limit for regulated prices for households.
  • 100% for vulnerable customers: limit for regulated prices.
  • 70% of the previous year's consumption: limit for regulated prices for SMEs.
  • 23 March 2022: date the Commission adopted the Temporary Crisis Framework establishing a temporary State aid regime.
  • 9 March 2023: date the framework was replaced by the Temporary Crisis and Transition Framework.
  • before summer 2023: intended timing for the Commission to propose a European Sovereignty Fund.