Before meeting of energy ministers
First country rejects proposal for EU gas price cap
11/23/2022, 7:33 p.m
The European trading place for gas should get an upper limit. In order to avoid future spikes, the EU Commission wants to set this at 275 euros per megawatt hour. Even before the member states can consult on Thursday, one state opposes the idea.
Before the meeting of the energy ministers of the EU countries tomorrow, Thursday, the Spanish government firmly rejected the European Commission’s proposal for a fixed gas price cap. The Commission’s proposal “will produce the opposite of its desired effect” and “result in higher price increases,” said Spain’s Environment Minister Teresa Ribera. A “majority of member states” are outraged by the Commission’s proposal.
The European Commission on Tuesday proposed a “ceiling” on increases in wholesale gas prices. This should only take effect under strict conditions – if the price on the European gas exchange in the Netherlands (TTF) is higher than 275 euros per megawatt hour for two weeks.
The TTF is a Dutch market index that is used as a reference for many gas sales contracts. This puts the cap at a level that does not reflect current gas prices. According to the EU Commission, the gas price is currently 116 euros per megawatt hour. In August, however, it was still 320 euros on the TTF market.
The lid should take effect in 2023
The price cap is to apply to contracts for deliveries agreed one month in advance. EU Energy Commissioner Kadri Simson said the cap would apply for a year from early 2023. Households and companies should be protected against extreme price swings with the means. The measure is carefully designed not to jeopardize deliveries to Europe, to keep markets stable and also to ensure financial stability.
So far, however, it is not expected that the energy ministers of the EU countries will agree on this specific price cap when they meet. Several member states like France have been demanding a gas price cap for months. But Germany, among others, is against it.