Emergency measures before the crisis? The puzzling pattern of price controls in the EU electricity market
Year: 2025
Type: article
Abstract: Electricity price controls have been a contentious feature of European energy markets, gaining renewed attention during the recent gas crisis. While often viewed as emergency measures, price controls were already established regulatory tools in many EU member states before the crisis. This study aims to explain the varied persistence of electricity price controls across EU member states between 2008 and 2020, addressing a critical gap in understanding energy market governance. Using a newly constructed dataset that measures consumer coverage under regulated prices, the analysis employs fractional logistic regression REWB modeling to test a newly developed political economy of regulated electricity prices. The findings reveal price controls to be interrelated energy governance mechanisms, rather than simple price caps, which influence the vulnerability of households to short-term price shocks. The analysis challenges conventional economic explanations: market concentration—often cited as a justification for intervention—shows no significant correlation with the adoption of price controls. Instead, the expansion of renewable energy and subsequent pressure on established energy regimes, combined with market-oriented party ideology, consistently predict the liberalization of price controls. Meanwhile, energy poverty levels and weak government efficiency are significantly correlated with the persistence of price control. These results demonstrate that political choices, rather than the functional considerations cited by regulatory authorities, shaped the development of this policy instrument, explaining previous non-harmonization attempts. Understanding these pre-existing regulatory patterns provides insights into states' varied approaches to electricity market regulation and extends knowledge about the drivers of state intervention and liberalization. • Pre-crisis price controls are an integral part of the energy governance. • Renewables have a significant impact on the continuation of regulated prices. • Pro-market parties advocate for the removal of price controls. • Energy poverty is a positive determinant of and consistent with regulatory explanations. • Market concentration does not correlate with the state of deregulation.
Author: Hermann Lüken genannt Klaßen
Institution: University of Göttingen
Language: English
Subfield: General Energy
Field: Energy
Domain: Physical Sciences
Open Access status: hybrid
Estimated APC paid: $5,220
OpenAlex ID: W4414090637