Regulating retail prices impedes the successful implementation of the Clean Energy for All Europeans Package, a unique opportunity that would empower European energy consumers, Eurelectric, Europex, WindEurope and EFET (European Federation of Energy Traders) have warned in a joint statement.
The package promises to empower consumers through a combination of measures, such as efficient price signals, certified comparison tools and easy switching, the four associations noted. Should retail prices continue to be regulated in some member states, the benefits brought by the Clean Energy Package would be severely weakened, they stressed.
Retail price regulation is also a serious obstacle to competition among electricity supply companies, the groups noted, as this reduces the incentive of companies to become more efficient and discourages the emergence of new market participants, they explained.
In addition to their negative impact on retail markets, regulated prices also distort the functioning of the wholesale markets, limiting and partly undermining the price formation process, ultimately leading to higher electricity costs for all consumers, the associations noted.
Regulated end-user prices aim to protect household – even non-household – consumers from energy costs increases but the pricing methodology often lacks transparency and can prove counterproductive, the associations stressed.
Also, the phasing-out of regulated prices does not imply the end of fixed-price contracts, the associations specified, adding that electricity suppliers will continue to offer such contracts.