June 1, 2015 / 10:06 AM / 5 years ago

EU wants flexible electricity prices for homes

BERLIN, June 1 (Reuters) - The European Commission’s planned reform of Europe’s power system will include proposals to make electricity retail markets and prices more flexible, Europe’s energy chief said on Monday.

European Commission for Climate and Energy Miguel Arias Canete said that as power generation becomes more unpredictable because of intermittent solar and wind, consumers should gain the option to respond to variable prices.

Unlike airline tickets, hotel rooms and other services, household electricity prices in Europe are largely fixed and bear no relation to the large swings in wholesale prices or the seasonal and daily variation in demand. Most countries have regulated or semi-regulated power tariffs.

Canete said consumers need a flexible retail markets, with reliable price comparisons and the ability to profit from the ups and downs of prices in intraday markets.

He said that in some countries contracts based on spot prices are already available and that in Sweden and Finland consumers use them to save up to 30 percent on their energy bills, adding that this was still the exception.

“That is why, alongside the market design initiative, we will propose our views on how retail markets will have to change,” Canete told the Eurelectric utilities conference in Berlin.

The European Commission is working on an electricity market reform that it plans to announce next year and which will also cover power generation and power networks.

Canete said the retail reform will aim at letting consumers control their consumption and lower their bills, which will involve a more direct link between the retail and wholesale energy markets.

“Consumers should be able to react to energy prices, and decide where and when to consume energy,” Canete said.

Canete was cool about requests by the European electricity industry for so-called “capacity mechanisms” that reward utilities for keeping capacity on standby for intermittent renewables.

Britain already has a capacity market and France is in the process of introducing one, but Germany has no plans for such a system, despite repeated pleas by utilities’ chief executives, including E.ON chief executive and Eurelectric outgoing president Johannes Teyssen.

“Some member states have introduced or are contemplating national measures to remunerate generation capacity which can distort the internal energy market,” Canete said.

In July, the European Commission will set out its initial views how to reform the electricity market design and then start and consultations with member states and the power industry. (Editing by William Hardy)

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