EU progress stunted on connecting power markets, auditors say

By Kate Abnett

BRUSSELS, Jan 31 (Reuters)European Union attempts to link up countries’ power markets have been foiled by complex rules and weak governance, auditors said on Tuesday, in an analysis ahead of a fresh EU overhaul of power market regulation.

The European Court of Auditors said the 27-country bloc had missed its target by nearly a decade to integrate members’ national electricity markets by 2014.

That aim intended to couple power markets to allow power to flow easily across borders – creating a more flexible system that would open up competition and increase consumer access to the lowest-cost energy.

But the EU market is still governed by national regulatory systems, with consumers’ power prices determined by national taxes and network charges, the auditors said.

From 2015 to 2021, no significant progress was made on increasing electricity transmission capacity between countries – conditions that fueled recent divergences in power prices between EU countries, the auditors said.

Cuts to Russian gas supply last year drove European electricity prices to record levels, and increased calls in some countries for reform. The European Commission has said it will propose power market reforms in March.

A Commission spokesperson said the auditors’ analysis focused on certain market rules, but other EU efforts had succeeded – such as coupling day-ahead electricity markets, which are now linked at all borders between EU countries.

“During the past year in particular we have seen how an integrated market helps to avoid electricity curtailment or blackouts despite a challenging security of supply situation,” the spokesperson said.

The auditors urged Brussels to use the upcoming reform to fix issues, including reassessing how power prices are formed – an EU-wide system in which gas plants typically set prices.

The auditors said complex EU rules for trade between countries had contributed to the slow progress in forging an EU-wide power market.

(Reporting by Kate Abnett; Editing by Sharon Singleton)


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