(updated throughout following the adoption of the reform)

BRUSSELS (dpa-AFX) - Consumers in the European Union are to be better protected from escalating electricity prices in future. The Council of Ministers finalized plans for the reform of the European electricity market in Brussels on Tuesday, as announced by the Belgian EU Council Presidency. In addition to more stable prices, the changes are also intended to promote the expansion of renewable energies.

Belgium's Energy Minister Tinne Van der Straeten described the day as a "milestone for the EU" on the path to a carbon-free and greener future. "By adopting the electricity market reform, we are empowering consumers, ensuring security of supply and paving the way for a more stable, predictable and sustainable energy market."

The most important questions and answers:

Why is the electricity market in the EU being reformed?

Calls for a reform of the European electricity market had become loud due to extremely high electricity prices in 2022. The reason for the high prices included exploding gas prices due to the Russian war of aggression against Ukraine. It was also noticeable that around half of France's nuclear power plants were temporarily out of action due to defects or maintenance.

At the end of last year, the EU member states reached an agreement with the European Parliament on the changes, based on a legislative proposal from the EU Commission. The reform aims to make the electricity market "more stable, affordable and sustainable", according to the European Parliament following the agreement in December.

How does the electricity market in the EU work?

The electricity market in the EU works according to the so-called merit order principle, and the reform will not change this. This refers to the order in which the power plants offering electricity on the electricity market are deployed. Power plants that can produce electricity cheaply are used first to meet demand. These are wind power plants, for example. In the end, however, the price is based on the last power plant to be switched on, i.e. the most expensive - often gas-fired power plants.

What applies to consumers?

In future, consumers will have the right to both fixed-price contracts and contracts with dynamic prices. This would allow consumers to opt for both secure, long-term prices and contracts with changing prices if they want to take advantage of price fluctuations - for example, to use electricity when it is cheaper for charging electric cars or for heat pumps.

Consumers should also receive important information about the options they take out. Furthermore, providers should not be allowed to unilaterally change the terms of the contract. "This should ensure that all consumers, including small businesses, benefit from long-term, affordable and stable prices and mitigate the effects of sudden price shocks," Parliament stated in December.

The countries are also to prohibit suppliers from cutting off the electricity supply to vulnerable customers - including in the event of disputes between suppliers and customers. In the event of an electricity price crisis, which can be declared by the EU countries under certain conditions, electricity prices for vulnerable and disadvantaged customers should be able to be reduced further.

How should renewable energies be expanded?

At the heart of the reform are new long-term contracts between governments and electricity producers, so-called Contracts for Difference (CfDs). With these contracts for difference, states guarantee electricity producers a minimum price for electricity if they make new investments. This applies to investments in renewable energies such as wind and solar power and in nuclear power.

If the market price falls below an agreed price, the state steps in and makes up the difference. If the price is higher, the surplus goes to the state. This is intended to create incentives for the domestic production of clean electricity.

What happens next?

The electricity market reform that has now been adopted still has to be published in the EU Official Journal and will come into force 20 days later. From then on, it will apply directly in all member states. However, for some regulations - such as consumer protection - the countries have six months to transpose them into national law./rdz/DP/ngu