EU gas cap seen in place for one year, countries at odds over price level

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The European Commission proposed introducing a gas price cap for one year from Jan.1, 2023, according to draft legislation seen by Reuters that has so far left the actual ceiling level blank.

The idea to cap prices has divided EU countries for many months. The Commission’s latest proposal will be debated by energy ministers from the bloc’s 27 member countries on Thursday.

An EU official said the Commission would propose a price higher than backers of the cap want.

One diplomat from that camp said the majority group expected the limit at around 150-180 euros per megawatt hour (MWh) for the cap to be activated several times in a year.

“Otherwise, we’ll have a cap on paper that will in practice never kick in,” said the diplomat, who spoke under condition of anonymity.

The Commission’s draft law – which needs to be approved by EU countries to take effect – says the market correction mechanism was to prevent any repeat of price spikes seen last August when month-ahead TTF prices approached 314 euros/MWh on Aug. 26 and stayed above 225 euros/MWh for two weeks in a row.

Meanwhile, France and Germany want to accelerate joint gas purchases to lower prices for consumers, French Finance Minister Bruno Le Maire said following talks with his German counterpart.

He also said that Europe needs to move faster on industrial projects in the face of competition from the United States and China, and that the European Commission needs to move faster to approve joint European industrial projects requiring state aid.

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