EU leaders ask for more detailed work on gas price caps

EU leaders ask for more detailed work on gas price caps

Updated: 1 month, 13 days, 8 hours, 16 minutes, 51 seconds ago


This was the “strategic” political guidance the EC had been seeking in response to its latest emergency energy proposals presented on Tuesday, said EC president Ursula von der Leyen. 

The EU leaders called on the EC to assess the impact of such proposals on existing gas supply contracts, ensuring they did not disrupt long-term contracts, and to take account of different national energy mixes and circumstances. 

The EC would now work with EU energy ministers to develop a formal legal proposal for a “market correction mechanism” to “limit episodes of excessive gas prices”, she said. 

The EC saw such a mechanism as setting a temporary maximum dynamic price for the Dutch TTF hub and to be used only as a last resort option in

Overnight compromise
In overnight talks in Brussels, EU leaders reached a

The EU leaders described it as a “dynamic price corridor” and backed the EC’s approach that it should safeguard supply security and gas flows within Europe, not apply to OTC trades and must not disrupt energy derivatives markets. 

Financial analysis
They also asked the EC “to urgently submit concrete decisions” on “a temporary EU framework” to cap the price of gas used for power generation. This must include a cost/benefit analysis, not change the merit order by which power plants are called on to supply the market, and not increase gas use. 

“We will analyse the financial impact on those countries with a lot of gas in their electricity production…and also the [potential] flow of subsidised electricity to non-EU neighbours,” said von der Leyen. 

The EC would work with energy ministers to find “a well-balanced and common approach” on these issues, she said. 

EU energy ministers are due to discuss the EC’s latest proposals and are expected to need more time and debate before reaching conclusions on them, according to an EU diplomatic source.

Amid key talks in Brussels yesterday and today, they also backed forming consortia to buy gas jointly, setting up a new, complementary LNG price benchmark by early 2023, and measures to reduce gas price volatility, as part of efforts to tackle high EU energy prices driven up by the shortage in Russian gas supplies since it invaded Ukraine in February.This was the “strategic” political guidance the EC had been seeking in response to its latest emergency energy proposals presented on Tuesday, said EC president Ursula von der Leyen.The EU leaders called on the EC to assess the impact of such proposals on existing gas supply contracts, ensuring they did not disrupt long-term contracts, and to take account of different national energy mixes and circumstances.The EC would now work with EU energy ministers to develop a formal legal proposal for a “market correction mechanism” to “limit episodes of excessive gas prices”, she said.The EC saw such a mechanism as setting a temporary maximum dynamic price for the Dutch TTF hub and to be used only as a last resort option in its Tuesday proposals In overnight talks in Brussels, EU leaders reached a compromise on the gas price cap as German chancellor Olaf Scholz dropped his opposition to it, the Financial Times reported early on Friday.The EU leaders described it as a “dynamic price corridor” and backed the EC’s approach that it should safeguard supply security and gas flows within Europe, not apply to OTC trades and must not disrupt energy derivatives markets.They also asked the EC “to urgently submit concrete decisions” on “a temporary EU framework” to cap the price of gas used for power generation. This must include a cost/benefit analysis, not change the merit order by which power plants are called on to supply the market, and not increase gas use.“We will analyse the financial impact on those countries with a lot of gas in their electricity production…and also the [potential] flow of subsidised electricity to non-EU neighbours,” said von der Leyen.The EC would work with energy ministers to find “a well-balanced and common approach” on these issues, she said.EU energy ministers are due to discuss the EC’s latest proposals and are expected to need more time and debate before reaching conclusions on them, according to an EU diplomatic source.

hit counter