The European Parliament and the European Council reached a provisional agreement on Thursday on the reform of the EU's electricity market design, the EP reported.

This deal will help the EU build a renewables-based energy system, lower energy bills and better protect consumers from price spikes and empower them to benefit from the transition. It will ensure a sustainable and independent energy supply to the EU, in line with the European Green Deal and the REPowerEU Plan.

“The reform aims to make electricity prices less dependent on volatile fossil fuel prices, shield consumers from price spikes, accelerate the deployment of renewable energies and improve consumer protection,” the Council statement said.

With this agreement, Europe will have a socially fair electricity market that will better protect citizens, especially the most vulnerable, with measures to ensure affordable prices for citizens and businesses and will speed up the energy transition,” said Socialist representative in the European Parliament Nicolas Gonzalez Cesares.

In order to protect consumers from unstable prices, the MEPs ensured that consumers have the right to choose contracts with a fixed or variable price and that key information about possible options is available to them, while companies may not unilaterally change the terms of the contract, the European Parliament says.

This is to ensure that all consumers, as well as small businesses, benefit from long-term, affordable and stable prices and to mitigate the impact of sudden price shocks.

It is also possible for EU member states to prohibit suppliers from interrupting the supply of electricity to vulnerable customers, according to the EP.

The agreed text foresees a mechanism for declaring a crisis due to the price of electricity in the event of a large increase in prices. In this situation, the EU can declare an electricity price crisis at the regional or EU level, allowing member states to take temporary measures to determine electricity prices for small and medium-sized enterprises and energy-intensive industries.

The deal will now have to be formally adopted by both the Council and the Parliament before it becomes law, a process which is usually a rubber-stamping exercise.