Electricity: liberalization of the European market arouses criticism

A quarter of a century after its liberalization, the European electricity market is not functioning. Totally « aberrant », he obeys rules “Obsolete”. At least in the words, at the end of September, of an observer as critical as it was unexpected: Bruno Le Maire, French Minister of the Economy, Finance and Recovery. Thursday, December 2, it was the turn of the ecological transition, Barbara Pompili: just before a meeting in Brussels with the other ministers responsible for energy in the member countries of the European Union, she pleaded for “Another way of approaching” this market, so that “Consumers are not victims of price fluctuations”.

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Urgent subject because, since the summer, prices are picking up as strong as economic activity. According to the avenues envisaged by Mr.me Pompili, the answer could be to return to long-term contracts. Or the constitution of common gas reserves, as Spain had already demanded. In France, if the executive is limited to wanting to amend the competition and privatization of this sector, others want to get out of this logic and return to the monopoly of EDF for electricity and Engie (ex-GDF Suez) for gas.

Energy must be understood as a “Common good insoluble in the market”, insisted, this same December 2, the Communist deputies. Presented to the National Assembly, their motion for a resolution calls on the government To “Enshrine the common character of energy and its public management in law”. She also asks “A report on the evaluation of the privatization of public enterprises, and on the consequences of deregulation of the energy sector”.

A market that “overreacts”

In the country, some will prefer to emphasize the advantages of the market. “European interconnection allows security of supply: it is essential for France forty days a year”, insisted Jean-François Carenco, president of the Energy Regulatory Commission (CRE), an independent administrative authority responsible for overseeing the electricity and gas markets in France, in an interview with World, in October. In addition, cross-border links allow the country to export a surplus part of its electricity production.

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Conversely, and without wanting to settle the debate, economists will also point out the current impasse of liberalization. French electricity production may well come mainly from its nuclear fleet, the prices of electricity on the market bow to the marginal cost of other power plants on the European plate – gas-fired ones, in Germany for example. Or the cost necessary to start up the last plant called to ensure the balance between supply and demand.

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Electricity: liberalization of the European market arouses criticism