EU plans lower power taxes and flexible network tariffs — NRG-IA

The European Union is preparing a major overhaul of the rules directly affecting energy bills: electricity is set to be taxed at a lower rate than natural gas, and network tariffs are to be redesigned to encourage consumers to use energy during hours when cheaper resources are available in the system. According to a European Commission draft seen by Reuters, the proposal is part of the EU's response to heightened pressure in the oil and gas markets, at a time when reliance on imported fossil fuels continues to weigh heavily on bills. The document is scheduled for publication on July 22 and may undergo changes before its official release. The stakes of this shift are simple yet far-reaching: electricity, increasingly generated from renewable sources, must become economically more attractive than consuming gas, oil, or other fossil fuels in transport, industry, and heating. Currently, in many European countries, electricity bills are loaded with taxes, levies, and tariffs that can make power more expensive than it should be relative to fossil alternatives. The bill enters the realm of structural reforms The plan shifts the energy price debate from temporary interventions to the very architecture of the bill. The European Commission is not merely aiming to offset costs, but to reshape the relationship between electricity, gas, and final consumption. In its Affordable Energy Action Plan, the Commission identified three major components of the bill: the cost of supplied energy, network tariffs, and taxes or levies. The new policy direction targets these exact areas. If electricity remains burdened with high taxes, electrification will slow down, even as renewable generation rises. This issue is particularly critical for heat pumps, electric vehicles, electrified industrial processes, and consumers capable of shifting part of their demand to cheaper time slots. A relatively lower electricity price can transform the economics of these technologies without requiring direct state subsidies for every piece of equipment. Electricity must become more competitive than gas The draft cited by Reuters stipulates that national governments should tax electricity at a lower level than natural gas. Member states would retain the right to set their own taxation levels, but within a common rule: electricity must receive more favorable fiscal treatment than gas. This orientation reflects a broader EU objective. The European Commission points out that in 2024, renewables accounted for 47.5% of gross electricity consumed in the EU, yet electricity covered only 23% of final energy consumption. The target introduced by the Clean Industrial Deal and the Affordable Energy Action Plan is for electricity's share of final consumption to reach 32% by 2030. The gap between these two figures highlights the real bottleneck. Europe is producing more and more clean electricity, but transport, heating, and industry remain heavily reliant on fossil fuels. Heavily taxed electricity loses the competitive race in the very sectors where electrification should be reducing dependence on gas and oil. Network tariffs as a behavioral tool The second major stake involves network tariffs. These are the fees collected by operators to run, maintain, and upgrade power grids. According to Reuters, network tariffs account for about a quarter of the average European household's electricity bill. The Commission wants these tariffs to send a clearer system signal. Consumers who can shift their usage to low-cost hours—when renewable generation is abundant or grid stress is low—should receive a visible economic incentive. Conversely, consumption during peak hours should more accurately reflect the real cost of grid usage and balancing. This logic is already embedded in the Commission's guidelines for 'future-proof' network tariffs. Brussels is calling on regulators to design tariffs that optimize existing infrastructure, incentivize flexibility, and encourage consumption when electricity is cheap. For consumers, the impact will not be automatic. A smarter tariff can only reduce costs if metering, retail offers, and consumption habits adapt accordingly. Without these elements, the reform risks remaining a technical adjustment visible primarily in policy documents rather than on actual bills. Smart meters: The gateway to dynamic billing The draft would also introduce a target for half of EU electricity customers to have smart meters by 2030. The significance of this technology goes far beyond simple remote reading. It allows consumers to track their usage in real time, enables suppliers to design more flexible offers, and allows the system to transmit price signals that reflect reality. Without smart meters, residential consumers remain largely locked into flat-rate billing, decoupled from hourly market fluctuations. With smart meters, time-of-use pricing, overnight EV charging, flexible appliance usage during cheap hours, and better integration of prosumers all…