Electricity market: Casares wants to give preference to low-income households

In his compromise proposal, Nicolás González Casares (S&D), the rapporteur for the reform of the electricity market, has advocated a redistribution of revenues from CfDs in favor of the lowest-income households. The European Commission argues for an equal distribution of revenues.

In the negotiating text, obtained by the French news magazine Contexte, the Socialist tightens the definition of bilateral Contracts for Difference (“CfDs”) compared to the European Commission’s proposal. The distribution of revenues from CfDs should not be evenly distributed to all consumers, the rapporteur demands. Priority should be given to the lowest-income consumers, he said. Casares also envisages that the revenues should go toward energy-saving measures and be used to finance the CfDs themselves.

As a reminder, CfDs are long-term contracts with prices guaranteed by the state. Investors participate in a bidding process based on the guaranteed price they are willing to accept. If the wholesale price of electricity is below that price, they receive a subsidy to cover the loss they would likely incur on the sale. If it is above that, the state retains the profit, which is then divided among electricity consumers.