The German chancellor announced on Tuesday that she wanted a reform of the electricity market applicable “from this winter” in her country, so that its price is not determined by the production of gas power plants. Therefore, this measure should contribute to lower prices and reduce the profits of the sector.
The reform desired by Berlin is proposed “in coordination” with the European Union (EU) and must be “implemented at great speed (…) starting this winter,” Olaf Scholz said in a speech to German business leaders.
In the European market, it is the cost price of the last source of electricity mobilized to meet demand, often gas-fired power plants, that determines the price imposed on all operators on the continent.
However, the price of gas has skyrocketed as a result of Russia’s invasion of Ukraine, dragging with it the price of electricity. Many companies that produce electricity from sources other than gas have seen their profits explode.
A reform that almost achieved consensus within the EU
A reform of this system, demanded for a long time by France but which divided the Twenty-seven, is now almost a consensus within the EU, which discusses its content. The European Commission proposes in particular to confiscate the super profits from nuclear and renewable energies, to redistribute them among the most vulnerable companies.
A “solidarity contribution” for fossil fuel companies (gas, coal, oil) is also mentioned. The German proposal is “almost the same” as the Commission’s, said Olaf Scholz.
According to the price comparator Check24, a “typical household” in Germany with a consumption of 20,000 kWh paid 3,717 euros per year for its gas in August, an “increase of 185%” in one year.
Source: BFM TV
