Consumer protection mechanisms during the current and future periods of high and volatile energy prices

Abstract

The recent surge in energy prices has prompted many governments to introduce emergency measures to reduce the impact on consumers’ electricity and gas bills. In its REPowerEU Communication of 8 March 2022, the European Commission confirmed that price regulation can be used to mitigate the effect of higher energy prices on consumers’ bills. However, most government interventions and what the Commission refers to are measures to reduce the energy prices facing consumers. This type of measures weakens the incentives to save energy, and therefore runs counter to the more general energy policy objectives of sustainability and security of supply, including the reduction of the European Union’s dependence on Russia. In this Policy Brief, a more targeted approach, based on lump-sum rebate payments, which protects energy-poor consumers from unaffordable energy bills, while maintaining the incentives to save energy, is proposed.