As per, the draft law would help protect household owners and small businesses, giving them more options when it comes to their energy supplier. At the same time, it aims to strengthen the long-term collaboration between EU energy companies and countries on the bloc.

EU energy commissioner Kadri Simson said that "the current electricity market design has delivered an efficient, well integrated market over many decades, but tight global supply and Russia’s manipulation of our energy markets has left many consumers facing massive increases in their energy bills."

"We are today proposing measures that will enhance the stability and predictability of energy costs across the EU. Driving investment in renewables will help us reach our Green Deal goals and make the EU the powerhouse of clean energy for the coming decades", she added.

The energy market in the EU works similarly across different countries, but there are certain factors, such as weather and what energy companies are supplying power, which can cause the price to escalate.

During normal demand times, the cheapest energy suppliers are at the forefront of delivering more affordable energy, while the more expensive companies, often using fossil power sources, come online when demand increases.

Frauke Thies, executive director of the Agora Energiewende think tank, said that "the Commission’s proposal introduces a set of measures that aim to cushion the effects of price hikes like the one that we saw last autumn, but also - crucially - to reduce the risk of such price hikes or crisis situations occurring again through a structural response."

The new law would allow customers to choose between two types of contracts, one promoting fixed prices and the other, more flexible payments, depending on power use. Another thing, according to authorities, is that customers can choose to mix and match contracts.

"We will allow consumers to have more than one meter and different contracts to serve their electric vehicle, heat pumps or domestic consumption. They can, for example, cover their consumption with a fixed price [contract], but charge their electric vehicle at these hours when prices are low, based on a flexible contract", Simson explained.

Households that pack renewable power sources, such as solar panels, can also sell their energy to the neighbors, something that they could have done in the past, as well, as prosumers.

The reform also plans to add more protective mechanisms for consumers, such as having a backup supplier in case the company they had a contract with initially goes bankrupt.

EU representative Sebastian Schulte-Derne said that "we see long-term contracting as the key to enabling households, but obviously even more industries, to hedge for themselves, to make them less dependent, less affected by short-term price peaks."