The prices are currently determined by the most expensive fuel needed to meet the last bit of demand. But Spain has argued that prices should reflect the average electricity mix, which includes cheaper renewables. They have also called for measures to stop speculation on the Emissions Trading System, which are market-based instruments that create incentives to reduce emissions where these are most cost-effective.
But instead of changing the rules for everyone, Spain is demanding that it should at least be allowed to temporarily prices for itself.
In a proposal paper, Spain wrote: “In exceptional situations, Member States have to be allowed to adapt the electricity price formation to their specific situations.”
This has come after soaring gas prices also meant electricity prices skyrocketed in Europe, even though gas only accounts for 18-20 percent of the EU’s electricity mix.
But Spain’s demands have been met with fierce opposition that has shaken up the bloc.
Eight countries, including Austria, Germany, Luxembourg and northern and Baltic member nations, issued a joint statement pushing back on Spain’s calls for the change to energy prices.
The statement said: “We share the analysis of the European Commission regarding the causes of the current price spike lying primarily in the encouraging global economic recovery and further fossil fuels demand and supply factors, but not in the design of EU energy markets or climate policy.”
But Spain responded: “Each +1EUR/MWh increase in the natural gas price represents €2.7billion (£2.27billion) per year in additional electricity costs … diverting resources from the energy transition and economic recovery and every day it gets worse,”
As EU energy ministers prepare to meet for an extraordinary Energy Council in Luxembourg today, the tension will no doubt be boiling as they debate the Commission’s “toolbox” of measures.
The call for the meeting came just days after an EU summit dedicated to rising energy costs as the EU continues to suffer energy turmoil.
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This also comes after Vladimir Putin’s gas squeeze has rocked the EU as gas prices have soared to record highs over recent months, playing a big hand in the EU’s energy crisis.
The Russian President restricted the flow of gas coming into Europe through pipelines as he hopes to speed up the approval of his newly built Nord Stream 2 pipeline.
But Mr Putin is hoping to avoid EU rules from being slapped on the pipeline, which will transit gas from Russia to Germany, bypassing Poland and Ukraine, once it has been approved by German regulators.
As a result, state-owned Russian gas company, Gazprom, decreased supplies of gas travelling into Europe, which has caused prices to spiral and is partly the reason why we now see a crisis unfolding.
EU countries are scrambling to resolve the crisis by calling for changes to energy prices in a move that has created division among the bloc.
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Ukraine gas giant Naftogaz’s CEO warned Express.co.uk earlier this month that Mr Putin’s pipeline would force EU leaders to lock horns.
He told Express.co.uk: “As we saw with Brexit, there is already a lot of pressure on the EU, so putting more pressure on the EU and dividing Europe, challenging the fundamentals on the EU like the rule of law.
“Of course, it doesn’t make Europe stronger, it makes Europe weaker and we will see a lot of pressure on the EU as a bloc, as a union, because of this, and that’s exactly what Putin wants.”
And Mr Vitrenko appears to be right.
Now there is clear disagreement among countries in the bloc, with two opposing sides made clear.
The French are also on Spain’s side.
Paris has also called for a change to the electricity price system.
Up to 70 percent of France’s electricity comes from nuclear, but because of the EU’s price finding system electricity prices have still surged in France.
President Emmanuel Macron argued at last week’s summit that this undermines EU citizens’ confidence in the Green Deal.