EPSU reaction on RePower EU - Temporary fixes and a missed opportunity for deeper reforms

EPSU reaction on Re-power EU

(18 May 2022) At a time where our energy supply faces major interlinked crisis of climate, war and poverty, the European Commission has presented a RePower EU package, including 15 documents ranging from solar strategy and permitting procedures to international energy policy and the design of the energy market.

Action is urgent. The challenge is colossal. We must act now to reduce our dependence on Russian energy imports, before the next winter. Our actions must not impede, but accelerate climate action. They must also alleviate the burden on households, at a time where about 80 million Europeans cannot sufficiently warm or light their homes.

A systemic crisis demands a systemic response

The current price and supply crises are hitting all European countries. Increasing prices are immensely benefitting energy suppliers’ profits, while workers and users are struggling to pay their bills. This is a direct consequence of the energy market design and the provision of energy as a commodity, not a public good.

The RepowerEU strategy correctly points out that the dramatic impact of rising energy prices on households not only affects energy poor, but also have strong impacts on living standards for the middle class. Besides the impact through rising bills, rocket high energy bills are also driving inflation, directly impacting all workers.

This makes it even more important that measures go beyond crucial support for the most vulnerable and need to include a complete view of systemic shortcomings. Where the problems are structural, the solutions must be structural as well.

At the same time, claiming that next to crucial investments in energy efficiency “reducing energy consumption through price signals” is one of “the cheapest, safest and cleanest way to reduce our reliance on fossil fuel imports from Russia” (EU Save Energy Communication) is cynical, especially at a time of rising energy poverty. This approach is unjust and hits those households the hardest who are already struggling the most. It also ignores existing carbon inequalities.

Some recognition of longstanding demands by EPSU

In the Communication on Electricity Market Design, we notice the proposal that “The electricity market design could include ways to ensure that all citizens have access to the energy they need.” This is a cautious recognition of long and persistent advocacy for the Right to Energy that EPSU has been calling for together with union colleagues and other allies in the Right to Energy coalition. It is urgent that this be realized without delay. It cannot be enough to speculate, we need action now.

We appreciate steps to enable member states to cap the retail price of gas and electricity and call on member states to use those tools. EPSU supports the regulation of energy prices as they protect consumers and in addition help to rein in inflation, which is currently rampant and largely driven by the costs of energy. These regulated prices should not be time limited, as they are now. At the same time, measures should be taken to ensure that workers in energy companies do not suffer as a result of such price caps, including through targeted state aid.

Windfall taxes have been a long-awaited and demanded initiative that EPSU greatly welcomes. Unions across Europe have strongly supported such a measure. We demand that these taxes directly benefit the affected households. Italy and Greece have already adopted windfall taxesWe call on others to follow.

One key demand that is not addressed is a ban on disconnections and the supply of a minimum amount of energy for all. Bans on the disconnection of energy as a primary, essential good  should be generalised by Member States. This should include the effective tackling of the problem of self-disconnections by users with pre-paid meters.

No real evaluation of liberalisation

We regret the lack of deeper analysis and reform of our energy model. -    A system that ties the price of electricity to the price of gas is fundamentally unsuited to ensure that Europeans have access to affordable energy, especially at a time of turmoil. Reform is direly needed.

We also need to evaluate the effects of liberalization. In 2019, EPSU has presented a profound analysis of the effects of liberalization in the energy market. It shows that the effects were largely negative for users and workers. Energy prices have been rising for years and quality unionized jobs were lost. It also shows that the expansion of renewables has been a result of public subsidies, not competition.

It is our conviction that in order to achieve a low-carbon economy we need to prioritise publicly owned and democratically controlled energy supply. We want to see a buildup of public power companies with a clear public goods mandate that will deliver on climate targets and shield our communities from the vagaries of the market.

See EPSU statement on the future of energy at a time of crisis 

See EPSU report ‘Going Public: A Decarbonised, Affordable and Democratic Energy System for Europe’ 

See overview of RePower EU package 

See Commission Communication on Electricity Market Design