The average annual bill of a resident of the European Union (EU) for electricity increased by 400-500 euros due to the rise in gas prices, so it is necessary to reform the European energy market, French Minister of Economy and Finance Bruno Le Maire said at a meeting of the Council of relevant ministers of the Eurozone.
“First, we need to improve the regulation of the gas market and the management of gas reserves. Secondly, it is necessary to ensure long-term contracts and regulated electricity tariffs for EU citizens, which must be firmly linked to the cost of electricity production, ”he said (quoted by TASS).
Le Maire noted that the “serious advantage” of the European energy market is that it provides supplies to all EU member states. However, the dependence of electricity prices on gas prices is a “serious drawback,” the minister said. “This is completely ineffective and we can no longer agree with it,” he said.
Deputy Chairman of the European Commission Valdis Dombrovskis, in turn, noted that the EU “intends to discuss ways to diversify supplies and storage, as well as to solve the problem of high prices for supplies.” Le Maire added that it is possible to ensure the production of more electricity without additional carbon dioxide emissions through nuclear energy, which, in his opinion, should be recognized as “green” due to the absence of greenhouse gas emissions.
About 20 years ago, the EU liberalized its gas market. There has been a transition from long-term contracts to short-term ones based on fuel prices, which are traded on exchanges and hubs. As a result, the cost of gas ceased to be closely related to oil, and spot prices became the basis for pricing. The reform was beneficial to the European market when abundant supplies kept prices low, experts interviewed by Reuters noted earlier. However, in today’s conditions of fuel shortage, the situation has changed.
Gas in Europe began to rise in price against the backdrop of calm weather, which led to a serious drop in wind generation, as well as due to the approaching heating season amid a shortage of gas and uncertainty about the launch of the Nord Stream 2 gas pipeline. On October 1, the price of November futures on the Dutch gas hub TTF for the first time exceeded $ 1,200 per 1,000 cubic meters.