Advantages of Energy Market Integration Still to Come

The incomplete integration of European energy markets are detrimental, especially for countries where gas contracts are still linked to oil like Bulgaria, the Baltic States, Slovenia an Sweden. 

According to the Agency for Cooperation and Energy Regulators (ACER), gas prices rose by 10% in 2012 

“The advantages brought about by the single market, such as lower wholesale electricity prices or a more efficient use of interconnectors identified in the study, still have fully to benefit final consumers in the retail market,” Lord Mogg, Chair of ACER’s Board of Regulators, commented in a note released on Thursday.

Imperfect integration and retail market fragmentation impacted negatively on European consumers, with social welfare losses of several billion euros in 2012, said ACER in the report.

‘In fact, network charges, taxes and other administratively set charges, including those to cover the costs of renewables support schemes – which may together account for up to half the energy bill – reduce the fraction of the overall energy price on which retailers can compete,’ explains ACER on its webpage. 

However, signs of progress emerged in 2012. ACER identified a certain degree of price convergence on European wholesale gas and electricity markets. At the same time, a higher relevance of sport markets and a more efficient use of the network were revealed, ‘with the average utilisation rate of the high-voltage grid increasing from 60% at the end of 2010 to 76% in 2012.’ 

“Delivering greater benefits to European consumers also requires completing the Internal Energy Market, while removing barriers to retail competition. Effort to achieve this goal by the end of 2014 should be stepped up through full implementation of the third package, adoption of the network codes and their early implementation. Any delay will cost European consumers billions of Euros annually”, said ACER Director, Alberto Pototschnig.