Federal Council wants to keep everyone happy

On 14 May 2025, Swiss Federal Councillor Albert Rösti presented the so-called accompanying measures – legal adjustments designed to help make the complete opening of the market socially acceptable and politically viable. These measures largely reflect requirements resulting from EU legislation in the electricity sector – the so-called ‘acquis communautaire’.

The proposed electricity agreement aims to reorganise electricity relations between Switzerland and the European Union (EU). This involves not only continuing the technical integration of the Swiss electricity grid into the continental European grid, but also addressing market-related, socio-political and institutional issues.

Full market liberalisation with social protection

The core element of the possible electricity agreement is the complete opening of the Swiss electricity market. In future, all electricity customers in Switzerland will be able to choose their supplier freely. However, households and small businesses with an annual consumption of less than 50 MWh will be able to remain in the regulated basic supply system if they do not switch providers. It should also be possible to return to the basic supply system; the Swiss Federal Council wants to allow switches during the year, but with compensation for the associated procurement risks for suppliers.

Consumer protection as a political backbone

On 14 May, the Swiss Federal Council discussed the implementation of the planned electricity agreement between Switzerland and the EU. The following measures are intended to cushion the impact of the electricity agreement on household customers, micro-consumers and employees in the electricity industry:

• Introduction of a comparison portal for electricity supply contracts.
• Creation of an ombudsman or arbitration board to resolve disputes out of court.
• Minimum requirements for the content of electricity supply contracts, for example with regard to services, quality, tariffs, contract duration, termination modalities, liability or dispute resolution.
• Electricity suppliers must register with the Swiss national regulatory authority ElCom, maintain a risk management system and have customer service in Switzerland.
• Supplier changes must be implemented as quickly as possible; in the EU, this must now take place within 24 hours on every working day.
• Suppliers with more than 50,000 customers must offer both electricity supply contracts with dynamic prices and fixed-price contracts.
• ElCom is tasked with monitoring the economic development of the electricity market for all end consumers in the basic supply system. If necessary, it should propose adjustments to the regulation of the electricity market or the basic supply system to the Swiss Federal Council.

The above measures are either part of the acquis communautaire or are standard practice in the EU; they do not therefore constitute a ‘Swiss finish’ or goldplating.

Employee protection

In view of the shortage of skilled workers in the electricity sector, the Swiss Federal Council does not see any risk of a deterioration in employment conditions in connection with the opening of the market. Furthermore, the Swiss Federal Council believes that market liberalisation in the EU has not led to any negative developments. Nevertheless, ElCom is to set up a system for monitoring employment conditions in the electricity sector. If negative developments arise, the Federal Council will take countermeasures. EU legislation on the EU internal electricity market does not provide for any comparable measures or powers for energy regulatory authorities.

Hydropower

The media conference on 14 May also addressed the awarding of concessions for the operation of hydropower plants: according to the Swiss Federal Office of Energy (SFOE), the owners (Cantons) will continue to be able to award concessions on a discretionary – but non-discriminatory - basis.

Confidential access to the agreement texts

Even before the planned publication of the consultation documents, the Swiss Federal Council decided to grant all members of the Swiss Federal Assembly access to the agreement texts on request and on a confidential basis. This was in response to criticism of unequal treatment between individual members of the Swiss Federal Assembly. Members of the European Parliament had already been granted access to the agreement texts by the European Commission.

What happens next?

The agreement texts were initialled by the chief negotiators of Switzerland and the EU on 21 May 2025. The consultation process is expected to begin in mid-June 2025 and could last three months. The English versions of the agreement texts and the planned legislative amendments will be published in the three official languages of Switzerland: German, French and Italian.

The consultation process will be followed by parliamentary debate in 2026. According to the Swiss Federal Council, the electricity agreement is to be submitted to an optional referendum as a separate bill, but Parliament could still decide otherwise. If the electricity agreement survives the political process, it could enter into force in Switzerland at the beginning of 2030. Until then, transitional arrangements will apply, e.g. for secure grid operation between Swissgrid and the transmission system operators in the EU.

The question of whether the agreement must also be submitted to the parliaments of the EU member states for a vote, or whether the Council or the EU member states alone will decide, is still open and has received little attention. In the past, there have been unpleasant surprises from the EU's point of view, such as in 2016, when the Walloon Parliament voted against the EU's free trade agreement with Canada (CETA).

The United Kingdom also wants to join the EU internal electricity market

Parallel to Switzerland, the United Kingdom is also trying to put its relations with the EU on a new footing. The United Kingdom left the EU on 31 January 2020. On 19 May, the United Kingdom and the EU signed a declaration of intent (‘Common Understanding’) which also includes chapters on energy and climate policy:

• Possible participation of the United Kingdom in the EU internal electricity market and, in particular, in the various EU trading platforms for electricity.
• Possible participation in the EU Emissions Trading System: This would allow the United Kingdom to avoid the application of the EU Carbon Border Adjustment Mechanism (CBAM), which will be levied by the EU on electricity and other imports from 2026.

The Common Understanding is partly based on the Switzerland-EU electricity agreement, for example with regard to the dynamic adoption of the relevant acquis communautaire and the final role of the ECJ in interpreting EU law.

Coupling of emissions trading: a special case for Switzerland

The planned linking of the emissions trading systems between the United Kingdom and the EU is also to be subject to clear conditions. In addition to the dynamic adoption of EU law, the United Kingdom is to recognise the ECJ as the court of interpretation for EU law. Switzerland, on the other hand, was able to link its own emissions trading system to the EU emissions trading system in 2017 without having to accept these conditions.

Conversely, the United Kingdom could be granted access to the EU internal electricity market without the EU insisting on free movement of persons between the EU and the United Kingdom. Free movement of persons is one of the most politically sensitive aspects of the EU in both Switzerland and the United Kingdom.

Market access: a long shot

The linking of the Swiss and EU emissions trading systems is the result of years of diplomatic work: negotiations began in 2008, the agreement was signed in 2017 and entered into force in 2020 – after almost twelve years. The electricity agreement between Switzerland and the EU also has a long history: initial technical talks began back in 2007, and negotiations at the political level have been ongoing for over a decade. A similar timeframe is realistic for the United Kingdom. Full integration into electricity trading and a CBAM exemption through the linking of emissions trading systems are also likely to take several years for the United Kingdom.

Geopolitics and market integration

Switzerland is seeking full integration into the EU internal electricity market. However, as the examples of Switzerland and the United Kingdom show, the EU only grants market access in return for institutional concessions. The coming years will show whether the changed geopolitical circumstances will trigger a new dynamic in EU integration or whether other forms of cooperation – for example within the framework of the European Political Community or NATO – will replace it. This new narrative of cooperation for defence purposes could replace integration via the EU’s single market as a project to promote prosperity.