|European Union Electricity Market Glossary|
Dynamic pricing refers to end-user prices that to a varying degree reflect the marginal network costs and/or generation costs of energy, which is normally purchased in the wholesale market.
Article 2(11) of the Proposal for a Directive of the European Parliament and of the Council on the internal market for electricity (recast) on common rules for the internal market in electricity (recast) of 30 November 2016 (COM(2016) 864 final 2016/0380 (COD)) defines 'dynamic electricity price contract' as 'an electricity supply contract between a supplier and a final customer that reflects the price at the spot market, including at the day ahead market at intervals at least equal to the market settlement frequency'.
Dynamic pricing has many applications according to the granularity of consumption metering and the dynamic nature of Time-of-Use Tariff (ToU).
There is significant variation in the penetration of dynamic pricing among household electricity consumers in Europe.
Dynamic pricing is more frequently applied in the supply of energy than in network charges.
As for gas, dynamic pricing is virtually non-existent, due to the storability of gas and, compared to electricity, the lower probability of peak prices (ACER/CEER Annual Report on the Results of Monitoring the Internal Electricity and Gas Markets in 2015, Retail Market, November 2016, p. 24).
Article 11(1) of the said Proposal of November 2016 envisions the rule that every final customer in the European Union Internal Electricity Market would be entitled, on request, to a dynamic electricity price contract by his supplier.
Article 16(7) of the Proposal for a Regulation of the European Parliament and of the Council on the internal market for electricity (recast), 30.11.2016, COM(2016) 861 final 2016/0379 (COD), moreover, stipulates that where the EU Member States have implemented the deployment of smart metering systems, regulatory authorities may introduce "time differentiated network tariffs, reflecting the use of the network", in a transparent and foreseeable way for the consumer.
Furthermore, pursuant to Article 16(9)(c) of the said draft Regulation, harmonisation of time differentiated network tariffs should be a part of the recommendation provided by the European Agency for the Cooperation of Energy Regulators (ACER) to the EU Member States' national regulatory authorities regarding the progressive convergence of transmission and distribution tariff methodologies.
Proposal for a Directive of the European Parliament and of the Council on the internal market for electricity (recast) on common rules for the internal market in electricity (recast), 30.11.2016, COM(2016) 864 final 2016/0380 (COD), Article 11
|Last Updated on Tuesday, 28 March 2017 22:14|