Critics who say expensive natural gas is the driving force behind Europe’s high power bills have got it right – but miss the forest for the trees.
Gas-fired power plants have a tight grip on Europe. Despite providing just 14% of electricity last year, they set the power price 40% of the time – making gas the decisive factor in calculating monthly energy bills.
Lest we forget, our energy bills are around three times more expensive than in the US or China. However, don’t let the very necessary fight against King Gas consume all the oxygen in the room.
A power bill is usually split into three components: fuel (gas), grid costs and levies. Whilst the price of the fuel itself depends on international markets, there are still plenty of means by which Europe could bring consumer costs down.
This is highlighted by the discrepancies in electricity bills across Europe.
Take Austria, where the EU’s 2000s market liberalisation simply failed and there is still “no functioning national competitive market,” as the head of competition authority BWB has admitted. Instead, all the energy firms simply own shares in each other and local governments happily partake in the bonanza.
Other issues affect all of Europe, like Paris blocking Spain from constructing cross-border cables to connect the sun-rich Iberian Peninsula to the European mainland – fearful of undermining the business case for nuclear (an industry French politicians back to the hilt).
Even worse is Germany’s infamous unitary electricity price zone – by which German politicians insist that electricity should cost the same in its wind-rich north and gas-reliant south, even though the cables to connect the two halves of the country do not exist. This has major ramifications for prices elsewhere in the bloc, the biggest loser being Denmark, where power prices are much higher because of competition from Bavaria.
Similarly, the for-profit firms that manage electricity grids are usually the same companies that own the cables – allowing them a stranglehold on bill-payers. | 
