Energy bills fail to show market losses, say EU regulators

Energy bills across the European Union remained stubbornly high for households last year despite falling market prices, raising competition concerns among EU energy market regulators.

EU regulators at the Agency for the Cooperation of Energy Regulators (ACER) and the Council of European Energy Regulators (CEER) said in a fresh report that on average energy bills increased in 2014 despite wholesale market prices falling.

“This fall had a positive impact on the prices paid by industrial consumers, but often not on the energy bills of residential customers,” the market monitoring report said.

The report found that on average across the EU electricity bills rose by 2.6 per cent with respect to the previous year, and gas bills rose by 2.1 per cent.

Addressing the disparity requires a greater focus on promoting competition through market integration. The report calls on member state regulators to fully implement the gas and electricity target models; integrate renewables into the energy system at least costs; and use cross-border network capacity in the most efficient manner.

ACER director Alberto Pototschnig added that “whilst half of the household bill is noncontestable, the other half of the bill is open to competition. There needs to be competition both at wholesale and retail level to ensure that EU energy consumers reap the full benefits of market liberalisation”.

“Market integration efforts should continue and be intensified. Social welfare losses for Europeans due to unscheduled electricity flows alone total about 1 billion euro every year,” he said.

In gas, the report found that great market integration led to price convergence among EU hubs and that countries with longer experience of open markets generally offered more choice. But prices were still high, with a greater market concentration in retail gas.

Lord Mogg, chair of Ofgem, ACER’s board of regulators and CEER president, said: “More than 80 per cent of EU energy consumers remain with their original suppliers seven years after retail market liberalisation. Promoting well-functioning retail markets is therefore a core focus for regulators.”