The European Parliament adopted on Thursday a proposed reform in the bloc's electricity market to make power prices less dependent on volatile fossil fuel prices and accelerate the deployment of renewable energy sources.
The Parliament passed the legislation with 433 votes in favor, 140 against, and 15 abstentions.
Following the energy price spike in 2022 after the Russian invasion of Ukraine, the EU has been seeking to reform the way its electricity market works to avoid a repeat of the energy crisis which hit households and industries with soaring power prices.
The reform is also aimed at shielding consumers from price spikes, accelerating the deployment of renewable energies, and improving consumer protection.
The European Commission presented last year a proposal to revise the rules for electricity market design and to improve the EU protection against market manipulation in the wholesale energy market.
The Commission says that the market reform is aimed at making the EU energy market more resilient and making the energy bills of European consumers and companies more independent from the short-term market price of electricity.
Under the proposal, which the European Parliament adopted today, vulnerable customers will be protected from having their electricity cut off, including during disputes between suppliers and customers.
According to the legislation, which now needs formal approval from the EU Council to become law, in case of very high prices and under certain conditions, the EU may declare a regional or EU-wide electricity price crisis, allowing member states to take temporary measures to set electricity prices for SMEs and energy-intensive industrial consumers.
The reform will also allow the use of so-called Contracts for Difference (CfDs), or equivalent schemes with the same effects, in all investments in new electricity production, whether from renewable or nuclear energy, the European Parliament said.
"The Parliament has taken a step forward in democratising energy, creating a market design that responds to the failures exposed by the energy crisis," lead MEP Nicolás González Casares said.
"All consumers, including micro, small, and medium-size enterprises will have access to long-term, affordable and stable prices."
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More