Austria calls to decouple gas, electricity prices

(EurActiv, 29 Aug 2022) The Austrian government calls for decoupling gas from electricity pricing, arguing that the way the EU electricity market works means prices continue to rise due to record gas costs

The EU’s 25-year electricity market design means that commodity prices rise and fall in parallel. The electricity price is determined every 30 minutes by the marginal cost of the last generating unit to be turned on to meet demand.

This is often a gas power plant with higher marginal costs than units such as renewables which are turned to first. As a result, the electricity price is set based on the cost of running gas power which is currently expensive and subject to supply insecurity.

Stakeholders are concerned that this essential means gas prices and flows decided by Russian President Vladimir Putin directly impact costs for European consumers.

“We must finally stop this madness that is currently taking place on the energy markets,” said Austrian Chancellor Karl Nehammer on Sunday, following an emergency government meeting. This would only be doable through a “European solution,” he added.

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EurActiv, 29 Aug 2022: Austria calls to decouple gas, electricity prices