Electricity market reform - European Economic and Social Committee proposes "E-Facility"

At its June plenary session, the European Economic and Social Committee (EESC) recommended reforming the EU's electricity market by liberalising where possible and regulating where necessary. Main priority: guarantee an affordable basic energy supply at regulated prices.

The European Economic and Social Committee (EESC) supports the creation of a future electricity market based on a public-private partnership and a mix of regulation and liberalisation.

At the heart of this model is a government-established "E-facility", which buys electricity from producers and sells it to suppliers of household customers, SMEs, Citizen Energy Communities and large-scale consumers and, where appropriate and possible, to other countries too.

The "E-facility" would conclude long-term contracts with electricity producers on the basis of tenders. These contracts would be of various types, such as power purchase agreements (PPA), contracts for difference (CfD) and cost+ contracts.

This is the key reform that should be carried in the EU's current electricity market according to the EESC opinion drafted by Jan Dirx and Christophe Quarez and adopted at the EESC plenary session on 14 June 2023.

The Committee has long advocated reform of the EU's electricity market, said Mr Dirx. We think the way forward is a hybrid model based on the principle of "liberalise where possible and regulate where necessary.

Energy is a key building block of our economic and social system and should not be treated like any other commodity. Energy is a central part of public services, stressed Mr Quarez. With our proposal, the government is responsible for delivering the objectives of sustainability, affordability and security of supply.

In the opinion, the EESC emphasises that the European Commission's legislative proposal for targeted reform of the electricity market, adopted in March 2023, is not enough and should have done more to adapt market design to the new reality brought about by Russia's invasion of Ukraine and an unprecedented surge in energy prices.

The new market design must guarantee an affordable basic energy supply at regulated prices and empower consumers by creating the right to share renewable energy directly, said EESC president Oliver Röpke.

What is more, the Commission's proposals for electricity market design have not undergone a full consultation and impact assessment. This is highly regrettable, pointed out Alena Mastantuono, rapporteur of the opinion on the EU Wholesale Energy Market, also adopted at the plenary session. No reform should be rushed through and public consultations and impact assessments are precious tools in the law-making process, she concluded.

Underlining that the Committee had been calling for more decentralised energy production for years, Lutz Ribbe, co-rapporteur of the opinion, said that the current energy market has allowed speculation, manipulation and huge profits. These need to be identified and removed, because people have to be at the heart of the new market design.