Dynamic pricing in the electricity retail market

This Debate will aim at reviewing the experience with the implementation of dynamic price contracts and their ability to benefit both consumers and the system.

Dynamic electricity supply contracts are defined as electricity supply contracts between suppliers and final customers that reflect the price variation in the spot markets, including in the day-ahead and intraday markets, at intervals at least equal to the market settlement frequency [1].

The Clean Energy Package introduced provisions [2] entitling all final customers who have a smart meter installed to conclude a dynamic electricity price contract with at least one supplier in their market and with every supplier that has more than 200,000 final customers.

Dynamic prices benefit both the consumers and the electricity system. The former are able to reduce their electricity bills by managing and adjusting their consumption, in response to price signals. The latter will benefit from (implicit) demand response triggered by high prices, thus potentially reducing the need for additional investment in generation and networks.

At the beginning of 2019, dynamic pricing contracts were available in seven EU Member States [3], with other Member States expected to follow in introducing them to comply with the new requirements. In Spain, unique case in the EU, a regulated dynamic price contract is the default supply contract, in which only the margin charged on top of the wholesale prices is subject to regulation.

To support the implementation of dynamic prices, in March 2020 the Council of European Energy Regulators issued a set of recommendations.

In this context, the Debate will aim at discussing:

• To which extent consumers have taken up dynamic price contracts;
• The impact of dynamic price contracts on the consumption pattern of consumers;
• Which elements of the regulatory framework are key for supporting the penetration of dynamic price contracts.

[1] See article 2(15) of Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU (recast).
[2] Article 11 of Directive (EU) 2019/944.
[3] Commission Staff Working Document accompanying the document Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Energy prices and costs in Europe {COM(2019) 1 final}, p. 262

Draft Programme

Introduction to the Debate and Opening Presentations

14.00 – 14.05     Introduction to the Debate

Alberto Pototschnig | Florence School of Regulation

14.05 – 14.15     Dynamic price contracts for the European Green Deal

Adela Tesarova | European Commission, DG Energy

14.15 – 14.25     The regulatory challenges to promote the take-up of dynamic electricity prices

Anne Vadasz Nilsson | CEER

Panel Discussion: Introductory Remarks, Polls, and Comments

Moderator:        Alberto Pototschnig | Florence School of Regulation

14.25 – 14.45     Introductory remarks from the panellists

Gema Rico Rivas | CNMC

Jaume Loffredo | BEUC

Alain Taccoen | Eurelectric

Roberto Zangrandi | EDSO

14.45 – 14.50     Polls

14.50 – 15.20     Comments on the polls outcome and Q&A from the audience

Panellists

15.20 – 15.30     Concluding remarks

Alberto Pototschnig | Florence School of Regulation

Leigh Hancher | Florence School of Regulation and Tilburg University

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