- · Rise in prices mainly driven by increases in taxes/levies and network costs.
· National policies on taxes, levies and network costs are fragmenting the internal energy market and causing a difference in prices.
· Constant improvements in energy efficiency may reach a limit as the EU’s trading partners do the same.
· Further effort is need to liberalise the market, to increase investment and competition and generate efficiencies.
· The Commission will launch an action plan on retail markets in 2014.
· Exemptions and reductions in taxes/levies can be means of protecting certain consumers if compatible with state aid though the report suggests it more efficient to protect vulnerable customers through social or industrial policy rather than energy pricing.
The report asserts that efforts are needed at both the European and national policy levels as a result of rising costs due to:
- · the investment required to shift to sustainable forms of electricity generation;
· the associated costs of upgrading the grid;
· the liberalisation of gas and electricity markets where the user rather than the tax-payers pays for new investment, have all impacted prices;
· the widening energy price gap between the EU and its trading partners.
“Energy” element of the price: EU energy policies such as the separation of electricity generation from system operation, a fall in EU ETS carbon prices and an increase in power generation capacity with low operating costs are credited with causing a convergence and fall in wholesale electricity prices. However, the fall in wholesale prices has not resulted in a reduction in the energy element of retail prices.
“Tax/levy” element of the price: Taxes and levies have increase significantly more than others. The report notes how taxation and levies finance energy and climate policy measures such as energy efficiency and renewable energy production in most Member States, with some Member States opting to use such levies for general revenue raising or to finance energy specific projects.
“Network” element of the price: Network costs increased by 18.5% and 30% for industrial and household consumers respectively since 2008.
Energy and Europe’s international competitiveness:
The energy price gap between the EU and its trading partners is expanding with the shale gas boom in the US, domestic subsidies in certain countries and rising demand in Asia all contributing factors.
Future prices and trends:
An accompanying Commission document’s findings and analysis is in line with the 2050 Energy Roadmap conclusions that fossil prices are expected to increase. Climbing electricity costs are on the horizon to 2020 due to rising fossil fuels costs and infrastructure investment. However, costs are set to stabilise beyond 2020 and decrease slightly as renewable energy.
- 20140121 Communication on Energy Prices and Costs in Europe.pdf - 353 Kbytes
- 20140121 Q&As Energy Price Report.pdf - 77 Kbytes
Thursday, 23 January 2014