By Jan Dirx

The reform of the EU electricity market should be based on a hybrid model combining market forces and government-led management, because energy is not a commodity like any other.

The European Economic and Social Committee has long been calling for a reform of the EU electricity market. The risks to which the EU's electricity market is exposed are, in practice, largely passed on to consumers and businesses. After Russia started its war against Ukraine, energy prices, which had already been on the rise since 2021, went up even faster. The war had a major impact on the cost of fossil fuels – particularly gas, which is used for generating a lot of electricity – and those price increases were passed on to end consumers in their bills.

These developments led to a European Commission proposal for a reform of the EU electricity market. The EESC recognises that the Commission's proposal takes some significant steps, but considers that they are not sufficient.

The Committee therefore puts forward a number of further-reaching reform proposals. The key principle for us is that energy should not be treated like a typical commodity; it is a crucial building block in our economic and social system, and thus a central element in public service provision. It is therefore necessary to create a regulatory framework for future energy that guarantees both an environmentally friendly, affordable and reliable supply of energy and the right to energy. This framework will be a hybrid model of market forces and government-led targeted management, with the motto "liberalisation where possible, regulation where necessary".

In our proposal, the heart of this model is a government-established "e-facility" which buys electricity from the producers and sells it to the suppliers of household customers, SMEs, citizen energy communities and large consumers, and where appropriate and possible to other countries.

We welcome the Commission's intention to make the electricity market more consumer-centric, but we believe that it could have gone further in this regard. For example, in our view the market should be organised to ensure that consumers and other small market participants that generate their own electricity can benefit as much as possible from the electricity they generate themselves, even if they feed it into the grid. Another, fairer way of giving small producers this opportunity is our idea of an "electricity bank", an example that can be further thought through and worked out.

Finally, we point out that the electricity market is in the midst of a paradigm shift and will therefore undoubtedly need to be further reformed in the coming years.