Spain, which holds the presidency of the European Union until December, has proposed several amendments to help pass a key piece of legislation that would overhaul the EU’s electricity market, a document shows.

The reform aims to help expand renewable energy and protect consumers from price hikes, such as those seen following Russia’s invasion of Ukraine, when record-high gas prices left consumers with soaring bills and fuelled inflation.

The bloc is racing to pass the draft law before the European Parliament elections next year, but EU countries have been at loggerheads since June and are still looking for a collective stance.

The proposed amendments seek to resolve a major source of contention among the EU’s biggest economies – mainly France and Germany – that state aid would distort the balance of industrial competition within the bloc.

A spokesperson for Spain’s representation to the EU declined to comment.

The core issue is how new, fixed-price power contracts will subsidise new energy projects or expand existing ones. EU members fear France would benefit unduly from its nuclear power plants and sell cheaper electricity to industrial units.

As part of the amendments, Spain proposes measures to control the flow of state aid to avoid “under- and over-compensation”.

“Avoid undue distortions to competition and trade in the internal market, notably by determining remuneration amounts through a competitive bidding process … Avoid distortions to the level playing field in the internal market resulting from the distribution of revenues to undertakings,” the document says.

Alongside this, the European Commission will monitor the redistribution of cash made from the contract-for-differences and may step in if there is any distortion.

“The Commission considers in a specific case that the redistribution of revenues as applied by a Member State distorts the level playing field in the internal market, the Commission may decide, in such a case, to set a limit to the distribution of those revenues to final customers,” reads the proposed amendment.

[Edited by Alice Taylor]

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