Late reaction of the EU against the price of electricity

The European Union has taken too long to recognize the reality of the facts: rising energy prices are unsustainable for individuals and companies and not intervene in it has the very high cost of weighing down the economic recovery by multiplying inflation. It took the outbreak of the war in Ukraine for the Commission to approach the repeated arguments of partners such as France and Spain to open the door to substantial changes, some temporary, others permanent, to decouple the price of gas from that of electricity and thus avoid what some experts call opportunistic price increases.

The possibility that the states subsidize part of the cost of the service and practically exhausted the route of tax reduction, put into practice in Spain and other countries, it is various formulas to smooth out the crazy price escalation. The first, rejected so far by Brussels, is to establish a tariff system that takes into account the real costs of how electricity is generated: it is absurd that the price of electricity production by other means – nuclear, hydroelectric, wind and, In general, renewable energies be dragged up by the price of gas. The other, more complex but unavoidable, is diversify supply so as not to depend on Russian gas, which even under normal conditions behaves speculatively with a rate of stored reserves below 20% of its real capacity. In the medium term, there are still more cards to play, especially increased coordination in gas purchases between the EU partners and the acceleration of the change in the energy model.

What has been confirmed by the Ukraine tragedy is that excessive dependence on Russia in the short term condemns the EU to patch up the situation by resorting to liquefied gas, whose importation and regasification is inevitably more expensive than buying through gas pipelines, and not too long term, requires interconnecting the entire supply network. The German decision to entrust its gas needs to the contract with Gazprom, as if Russia were a reliable partner in political terms, it was a major mistake which must be corrected now as soon as possible. The amount of investment made by Russia in gas pipelines has not prevented Vladimir Putin from unleashing an international crisis, and there is no sign that he will immediately subside the crisis, quite the contrary.

It is urgent to rectify and explore all ways to improve the situation. Because what is certain is that whatever solution the EU finally adopts, it is necessary to intervene in the market mechanisms. Part of the increase in supply prices is unavoidable, the result of the search for alternative suppliers, further away than the Russian deposits and that require more complex and expensive logistics. Another part can be palliated changing the pricing system yes or yes, to alleviate the cost of the ongoing crisis in the energy sector that rests on the shoulders of consumers and the profit and loss accounts of companies. The companies responsible for the supply should assume that when exploring the EU “all possible options” In the words of Commissioner Kadri Simson, including the establishment of temporary limits on electricity prices, it is possible that they will end up sharing, with private or industrial consumers, the costs of the current situation. No one comes out of a war unscathed.