Brussels now announces an “emergency intervention” in the electricity market | Economy

The President of the European Commission, Ursula von der Leyen (centre), this Monday during the Strategic Summit in Bled, in Slovenia. Darko Bandic (AP)

The European Commission finally says enough to the high electricity prices in the EU. Its president, Ursula von der Leyen, announced this Monday an “emergency intervention” in the electricity market. “The vertiginous increase in electricity prices is revealing the limitations of our current market design”, he acknowledged in a speech in Slovenia, more than a year after Spain launched the first warnings about the worrying market situation electrical and the need to make changes.

There are few things that rulers fear more than inflation. Overthrow governments. Shoot discontent. And this is beginning to be seen in Europe. In Belgium, for example, a general strike is called for November 19 in order for wages to rise as prices do. In Spain, the unions announce mobilizations. The social climate is beginning to heat up and the Russian pressure on the prices of fossil fuels, and by extension on the shopping basket, tightens. Given this scenario, with electricity trading close to 700 euros per megawatt hour (MWh) in countries such as France and Germany, the President of the Commission has launched that announcement. And, furthermore, shortly after, she reported that on Tuesday she is going to travel to Berlin to meet Vice Chancellor Robert Haebeck, the head of the German Government for the Economy and Energy.

Von der Leyen has called for a European response to Russian energy blackmail. “The era of Russian fossil fuels in Europe is over and freeing ourselves from blackmail will bring us more power to defend the global order,” he said. The President of the Commission recalled that Europe is cutting ties with Moscow’s energy “at the speed of light”, diversifying suppliers and with a clear strategy to promote renewables and improve savings capacity and increase reserves among Twenty seven. All this with a view to Europe “being prepared for a potential disruption of Russian gas.”

The skyrocketing electricity prices are now exposing the limitations of our current market design.

It was developed for different circumstances.

That’s why we are now working on an emergency intervention and a structural reform of the electricity market.

– Ursula von der Leyen (@vonderleyen) August 29, 2022

Von der Leyen’s words come at a time when electricity prices are skyrocketing in much of the EU countries. In Spain, for example, the price of electricity continues to record highs and will reach the third highest level in history on Tuesday, with a daily average of 459.4 euros per megawatt hour. It is the highest peak since the so-called Iberian exception began to be applied in mid-June, according to provisional data published this Monday by the Iberian Energy Market Operator (OMIE), and represents 8.5% that this Monday. If Spain did not have the cap on gas, a formula that has managed to make electricity cheaper -although it continues at record levels- compared to the other large EU markets, the price of electricity would reach 521.3 euros/ MWh.

In the countries of the European environment, prices are even higher. France will register an average above 740 euros/MWh, while Germany will exceed 660 euros/MWh. Berlin has also reached a new record: the wholesale cost of electricity in the German market for 2023 has exceeded 1,000 euros/MWh for the first time on Monday, doubling its price in just two weeks.

The energy ministers of the European Union will meet extraordinarily on September 9 to discuss new measures to respond to the energy crisis caused by high gas prices. The Government of the Czech Republic, which this semester holds the rotating presidency of the EU, had already publicly announced its intention to convene an “urgent” meeting on this matter and the head of Energy, Jozef Zíkela, has confirmed the date in a message which he shared on Twitter. “After a weekend of negotiations, I can announce that I am convening an extraordinary meeting of the Energy Council. We will meet in Brussels on September 9”, he reported. “We must fix the energy market. An EU-wide solution is by far the best [opción] what we have,” he added.

Explanatory video on the measures that we can all implement to save energyVideo: EPV

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