Public control of electricity is the only way to secure price stability for consumers

By Marina Mesure, MEP (GUE/NGL - France), Shadow Rapporteur on the reform of the electricity market desig

Unlike other political groups and the Commission itself, my proposals for the electricity market called for a complete restructuring of how electricity production and retail is organised and governed.

What conclusion any reasonable economist would draw from the electricity crisis ? Electricity being an essential good, price volatility affects the entire economy as economic actors no longer are able to foresee their fixed costs. It drives skyrocketing inflation and generally weakens competitiveness.

A market-based electricity sector is intrinsically subject to price fluctuations, especially when based on a marginalist approach. Ursula Van der Leyen actually recognised it publically during the previous speech on the State of the Union in 2022.

To ensure price stability, the pricing system needs to reflect actual costs of production. To ensure that profits are only redistributed for the needs of the grid and production and do not constitute a driver of price instability and inflation, electricity production and retail shall not be market-based.

Hence, a publicly owned monopoly on production is essential to achieve this goal, to protect family’s bargaining power, public finances and companies’ competitiveness.

Public control shall also concern retail of electricity. Indeed, another challenge of the electricity system is to ensure that we produce enough green electricity for the needs of the green transition. How can we ensure that we channel enough funds for a rapid increase of electricity production ? By using people’s bills towards this goal, instead of using this money to ensure profits of shareholders of energy companies. Private entities capacity to finance electricity production is also limited by skyrocketing interest rates, thus they have limited incentive to invest in capital-intensive assets. Geothermal energy is an example of how short-term profits as a sole incentive limits the development of promising sources of renewable energy that have the capacity to ensure Europe’s sovereignty.

An integrated system, from electricity production to consumer billing was the prevailing system before the liberalisation of the sector. Why ? Because it is simply common sense that such an essential good, produced by a network industry, must be managed centrally by a public actor.

It is the only way to promote price stability and price equalization between all consumers as well as prices that reflect the real costs of production of electricity. Industrial competitiveness of several countries, such as France, has been built on this model. Today, the United-States decides to implement IRA, which clearly undermines our industry’s competitiveness. Let’s protect it and its millions of jobs by taking back control on this essential sector. An essential sector needed for green transition.

Public control does not mean focusing on a State level. It could also be achieved at a European level. And even if Member States were to manage their own electricity system, I am in favour of a clause of solidarity between them to ensure that taking back control does not mean not helping your neighbour if it is facing electricity shortages.