On 03 March, the Council of European Energy Regulators (CEER) published a report on dynamic price contracts in light of the changes introduced by the “Clean Energy for All Europeans” Package (CEP). According to CEER, “dynamic price contracts could be beneficial for the consumer as they enable those who can manage and adjust their consumption, in response to price signals, to save money on their electricity bill”.
According to Article 11(1) of Directive (EU) 2019/944 of 5 June 2019, on common rules for the internal market for electricity, “final customers who have a smart meter installed can request to conclude a dynamic electricity price contract with at least one supplier and with every supplier that has more than 200.000 final customers”.
Thus, in order to claim this right, consumers will need to be equipped with smart meters, which in the cases where they are not installed yet, raises the issue of who will bear the cost for such installation. Importantly, the adoption of such a contract is not a compulsory option for customers and its attractiveness will be determined by the market and therefore regulators will not interfere with the consumers’ choices.
Furthermore, the Directive “requires that consumers must be fully informed by suppliers of the opportunities, costs and risks of dynamic price contracts, and suppliers must obtain each final customer’s consent before that customer is switched to such a contract”. CEER recognises that the specific characteristics of each wholesale market “will influence the general design and price volatility of each individual product” and therefore need to be taken into account.
Finally, CEER recommends that “dynamic price contracts refer to day-ahead market prices” and although “contracts can also make use of wholesale prices on the intraday market”, these tariffs could be more complex and technically difficult to implement, even though there are significant opportunities for the consumers in terms of pricing.
As the implementation process of the Directive goes in the different Member States, it remains to be seen how this issue will be tackled under the different legislations and regulatory authorities.