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APsplainin EU, German leaders pledge reform to cut electricity prices, 29 Aug
special re-regulation operation
European Commission President Ursula von der Leyen said in a speech in Bled, Slovenia, that soaring electricity prices "are now exposing the limitations of our current [internal] electricity market design."

"It was developed for different circumstances," von der Leyen said. "That is why we are now working on an emergency intervention and a structural reform of the electricity market."

The continent's electricity market is underpinned by a "merit order" system in which the power stations offering the cheapest electricity are tapped first, but prices are determined by the last and most expensive power stations to be tapped -- at present, those using gas, whose price has risen sharply following cuts in supplies "embargo" by Russia EU27 to several European countries amid the war in Ukraine.

EC | The internal market in energy: Coordinated measures on the security of energy supply (2002)
The process of opening up the market in natural gas and electricity to competition is governed by rules relating to access to resources and transport networks, competition and transparency which should protect the countries of the European Union against disruption of their internal supplies. This regulatory framework is essential and will make it possible to avoid crises such as that which hit California in 2000 [?!] when it experienced serious disruption of electricity supplies.

Of major importance for the proper functioning of the internal energy market is the interlinking of networks since it plays a fundamental role in the flexibility of supplies. The lack of network infrastructure, including maintenance of the quality of supplies (stability of networks) could hinder the integration of national markets and thus restrict security of supplies. On 20 December 2001, the Commission proposed a set of new measures relating to energy infrastructures aimed at optimising the use of existing gas and electricity infrastructures and encouraging the construction of new infrastructures of European interest. ...

"Clearly what is currently being asked as a market price does not reflect supply and demand in the proper sense," [German Chancellor Olaf Scholz] said.
Speaking earlier in Berlin, a German economy ministry spokeswoman said that the idea is to keep the principle of the "merit order" system, "but do away with the negative effects the merit order has, so that the high gas prices can no longer impact immediately and automatically on electricity prices." The aim is for customers to benefit from cheaper production prices for renewable energy, for example, spokeswoman Beate Baron said.
archived After Shock | ancient history, new realities
by Cat on Mon Aug 29th, 2022 at 05:15:38 PM EST
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