Citizens Advice response to European Commission consultation on energy market design

Citizens Advice response, 22nd September 2015 287 KB

This response was prepared by Citizens Advice. Citizens Advice has statutory responsibilities to represent the interests of energy consumers in Great Britain and welcomes the opportunity to respond to the European Commission’s consultation on a new energy market design.Citizens Advice supports efforts to move to market structures that more accurately reflect scarcity. This is an important way of conveying price signals reflecting the genuine value of consumption and production, at different times and in different locations. Incorporating price signals in this way alleviates the need for governments and system operators to forecast generation capacity and demand for years far ahead, a process which is inherently uncertain and in which the incentives acting on the forecasters will most likely lead to conservative estimates and to excessive investment in generation plant at consumers’ expense. To achieve this beneficial outcome for consumers, a number of challenges must be overcome. Capacity mechanisms We are concerned that efforts to move in the direction of scarcity-reflective prices have been impeded by the adoption of capacity payment systems in a growing number of Member States, including Great Britain. Even Member States which have not adopted capacity mechanisms are likely to be influenced by them if interconnected neighbours initiate them.