On April 30, 2026, the European Commission published a report (COM(2026) 850 final) on market-based electricity prices for end customers, effective competition in retail markets, and the promotion of flexibility remuneration in supply contracts. The document fulfills the Commission’s obligation under Article 5(10) of Directive (EU) 2019/944 on common rules for the internal market in electricity and, at the same time, reflects the policy priorities set out in the Action Plan for Affordable Energy (COM(2025) 79).
The report covers two thematic areas, which the Commission considers to be mutually reinforcing. The first concerns the application of Article 5 of the Electricity Directive – the principle of free pricing by suppliers and the conditions under which Member States may introduce public interventions. The second is devoted to demand response as a tool for lower consumer bills and for more effective integration of variable renewable energy sources. The analysis is based on Member States’ reports under Article 5(9), monitoring data from ACER and CEER, Eurostat statistics, and additional studies.
Status of price interventions in Member States
As of March 31, 2025, the picture across the EU is highly diverse. Fourteen Member States – Austria, the Czech Republic, Germany, Denmark, Estonia, Greece, Finland, Croatia, Ireland, Luxembourg, Latvia, the Netherlands, Sweden, and Slovenia – have declared that they do not apply price interventions. Three countries (Belgium, Italy, and Portugal) maintain interventions limited to energy-poor and vulnerable households, in the form of social tariffs integrated into broader national strategies against energy poverty.
Six Member States – Bulgaria, Spain, France, Hungary, Lithuania, and Slovakia – apply regulated prices for all households and/or micro-enterprises as part of a transition period toward full competition. Three countries have announced the termination of interventions in 2025: Poland (September), Portugal (December), and Romania (July). Cyprus and Malta benefit from derogations under Articles 66(4) and 66(5) of the Directive.
The coverage of regulated prices varies significantly among countries in transition: 18% of households in Portugal, 27.3% in Lithuania, 29% in Spain, 57% in France, and 63% in Poland are supplied at regulated tariffs. At the opposite end of the spectrum are Bulgaria, Hungary, and Slovakia, where nearly 100% of residential customers remain on regulated prices. This concentration raises specific questions regarding compliance with the criteria under Article 5(7), particularly regarding evidence of progress toward effective competition and the fair distribution of the financial burden between market and regulated segments.
Bulgaria’s Position
The Bulgarian retail electricity market stands out in the report as one of the examples of sustained dependence on regulated prices for residential customers. According to data cited by the Commission and in line with ACER’s 2024 monitoring report, nearly 100% of households in Bulgaria continue to be supplied under regulated tariffs. The rate of supplier switching remains consistently below 5%, placing the country among the Member States with the lowest consumer activity indicator, alongside Austria, Croatia, Lithuania, Poland, and Slovakia.
The requirement of Article 5(7)(a) that public interventions in price formation be accompanied by a package of measures to achieve effective competition and by a methodology for assessing progress is of direct relevance to the national regulatory and legislative agenda. The Commission explicitly states that Member States should draw up a roadmap with defined measures, interim targets, and evaluation indicators, including the reduction of distortions in price mechanisms, greater transparency of market signals, and fair competition among suppliers. The Commission announces that it will deepen the dialogue with Member States and monitor the implementation of these roadmaps.
Data on the deployment of smart metering systems add further weight to the national analysis. According to the chart presented by the Commission based on the ACER-CEER MMR 2024 and ACER’s national reviews (July 2025), Bulgaria is among the lagging Member States with a penetration rate of about 46%, significantly below the EU-27 average of nearly 60% and far behind the fifteen countries that have crossed the 80% threshold. This structural deficit simultaneously limits retail competition and the possibility of implementing flexible contracts that require measurement intervals at least equal to the imbalance settlement period.
Competition in Retail Markets – Indicators and Barriers
The Commission uses two traditional indicators to assess competition: the Herfindahl-Hirschman Index (HHI) and the rate of supplier switching. Since the entry into force of the Electricity Directive in 2019, the average HHI in the EU has decreased slightly, with a trend toward improvement in countries without regulated prices and a slight deterioration (an increase of 1.7%) in countries where nearly all households are on regulated tariffs. The energy crisis has had a negative effect on market concentration—the average HHI for twelve countries with complete data rose by 4.7% between 2021 and 2022, partly attributable to consolidation and the exit of suppliers from the market.
Supplier switching rates vary significantly. ACER notes that among Member States with switching rates below 10%, nearly three-quarters (73%) have a dominant supplier. The share of households subject to public price interventions is relatively lower in countries where supplier switching exceeds 10%, an indication that regulated prices may act as a barrier to consumer mobility. Among the main barriers identified in Member States’ reports, the following stand out: low consumer engagement (11 countries), the presence of a dominant player (10 countries), small market size (9 countries), and limited access to the wholesale market combined with anti-competitive practices (5 countries).
For markets with characteristics typical of the Bulgarian market – a historically dominant traditional supplier, limited wholesale liquidity, and a narrow range of offers—the “non-alternative measures” recommended by the Commission are particularly relevant – fair and transparent access to the wholesale market, tools for comparing offers (mandatory under Article 14 of the Directive), simplification of procedures for new suppliers, information campaigns, and specific obligations for dominant market participants.
Consumption flexibility as a key element of the energy transition
The second pillar of the report introduces consumption flexibility as a tool with dual value – direct benefits for consumers through lower bills and systemic benefits through better integration of RES and cost reduction. Article 2(20) of the Electricity Directive defines “demand response” as a change in the electricity load of end customers in response to market signals, including time-varying prices or incentive payments.
The Commission distinguishes between two main types: implicit (price) response, in which the consumer reacts to time-varying prices without a separate commitment, and explicit (incentivized) response, in which the consumer, often through an aggregator, commits in advance to reduce or shift load in exchange for financial compensation. The implicit response is the focus of the second chapter of the report, as it is directly related to retail offers. The legal framework is established by Directive (EU) 2019/944 (amended by EMD – Directive (EU) 2024/1711), Regulation (EU) 2019/943 (amended by Regulation (EU) 2024/1747), and is supplemented by Article 11 (right to a dynamic pricing contract), Articles 13, 15, and 17 (aggregation, active customers, demand response), the future network code on demand response and the implementing act on data interoperability.
Smart metering systems as a fundamental tool
Without the widespread deployment of smart metering systems, flexibility remains theoretical. The Commission sets out three priorities:
- rapid deployment with full functionalities under Article 20 of the Directive;
- interoperable access to data in accordance with Regulation (EU) 2023/1162;
- active consumer engagement through communication, in-home displays, and digital tools for consumption management.
Fifteen Member States have already surpassed the 80% penetration threshold, and ten are close to full coverage. Bulgaria, along with the Czech Republic, Germany, Greece, Hungary, Poland, and Slovakia, remains in the group of laggards. This disparity directly accounts for the limited availability of dynamic offers—according to ACER data (July 2025), the penetration of dynamic-price contracts exceeds 5% in only a few Member States: Finland, Latvia, the Netherlands, Sweden, and Spain.
Types of flexible supply contracts
The report categorizes four main types of flexible contracts. Dynamic-price contracts reflect wholesale market prices (typically “day-ahead” or “intraday”) at intervals no shorter than the imbalance settlement period. They are best suited for consumers with responsive assets—electric vehicles, heat pumps, home storage systems – and can lead to savings of up to 40% with active demand management, according to the Commission’s calculations based on ACER’s 2025 market monitoring report. Time-of-use contracts divide the day into a limited number of price intervals and are more predictable and more affordable for consumers with a fixed ability to shift their load.
Hybrid contracts combine a fixed and a variable component, providing a balance between predictability and savings potential, a model that, according to the Commission’s public consultation, enjoys broad support among consumer organizations. Contracts with critical peak pricing (CPP) significantly increase prices during periods of extreme imbalance between supply and demand and are typically applied as part of commercial offers, in parallel with the regime under Article 7a of Regulation (EU) 2019/943 for a temporary regulated product to reduce peaks during a price crisis.
Article 11 of the Directive requires every supplier with more than 200,000 customers to offer at least one dynamic pricing contract to customers with smart metering. Transparency requirements include fully informing the consumer about the benefits, risks, and technical prerequisites before concluding or renewing a contract (Article 11, paragraphs 1a and 2). The illustrative examples from the report—‘Välkky’ and ‘Oomi Flex’ in Finland, “Empower Flexi-time” in Belgium, and “Ma Recharge Intelligente” in France—show that markets are already developing a variety of hybrid models targeting both general consumption patterns and specific applications such as electric vehicle charging.
Multiple supply contracts and interaction with network tariffs
The amendment to Article 4 of the Directive via the EMD introduces a significant new right – any end customer may enter into more than one supply contract simultaneously, through separate metering and billing points linked to a single connection point. In practice, this allows a household to combine a fixed-rate contract for primary consumption with a dynamic contract for electric vehicle charging and a time-of-use tariff for a heat pump, avoiding the “all-or-nothing” dilemma that often discourages consumers from switching to dynamic pricing.
Network charges, which according to the ACER-CEER MMR 2024 account for an average of 24% of the electricity bill in the EU, are the second key component of the price signal to the end customer. The Commission recommends that tariffs be cost-oriented and aligned with flexible supply contracts in accordance with the 2025 Guidelines on Distribution Tariffs (C/2026/126). Coordination among regulators, system operators, and suppliers is essential to avoid conflicting price signals and to fully realize the benefits of shifting demand away from peak periods—including in the form of reduced system costs and alleviated grid congestion.
Recommendations and Conclusions
The Commission is not proposing a new legislative initiative under Article 5 at this stage, but is announcing enhanced monitoring of implementation and new reporting arrangements through national progress reports on the Integrated National Energy and Climate Plans (NECPRs), likely on a biennial basis, similar to the regime under Article 4(9) of the Gas Directive (EU) 2024/1788.
For Member States with a high share of regulated prices, including Bulgaria, the report sets out several specific expectations:
- developing a clear and time-bound roadmap toward market-based prices;
- strengthening fair access to the wholesale market;
- accelerated deployment of smart metering systems and full implementation of data interoperability requirements;
- diversification of flexible offers;
- targeted consumer outreach, including comparison tools, illustrative bills, and independent risk assessment methods;
- cost-oriented network tariffs;
- establishment of specific safeguard mechanisms for vulnerable households, including optional bill-stabilization tools within flexible contracts.
It is emphasized that flexibility should not be promoted indiscriminately, but should remain voluntary, transparent, and tailored to different consumer profiles. In the context of the Bulgarian market, the recommendations set a clear agenda for the Energy and Water Regulatory Commission (EWRC), the Ministry of Energy, and licensed suppliers. The transition to effective competition, coupled with a phased reduction in regulatory coverage and the simultaneous development of flexibility infrastructure (mass smart metering, data interoperability, cost-oriented tariffs), will determine both the pace of RES integration and the affordability of electricity for end-users in the medium term.
