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    Gas price cap proposal described as a "joke" by several European countries

    November 28, 2022 - CE Noticias Financieras


      The European Union (EU) has once again postponed a decision on imposing a natural gas price cap after a tense meeting of ministers at which no significant progress was made on the issue, which is key to protecting citizens and businesses in the European community from exorbitant energy bills.

      Energy ministers meeting in Brussels widely criticized a cap proposal prepared by the European Commission, with several criticizing it as a "joke" because the criteria envisaged are so high that they may never be triggered. Other states, skeptical about the introduction of such a ceiling, warned of a risk to supply stability.

      But the 27 member states agreed in principle on a joint gas purchasing platform for next year and the acceleration of permits for renewables, two much less controversial measures, announced Czech Energy Minister Jozef Sikela, whose country currently holds the rotating presidency of the Union.

      However, formal adoption of these two measures would have to wait until the price cap issue is resolved at a new meeting tentatively scheduled for December 13, Minister Sikela told reporters.

      Spain, France, Poland and Greece were among the many to utter harsh words about the Commission's plan on Thursday.

      "The gas price cap proposal seems to be designed never to be used, which seems to us to be a bad joke," Spanish Minister for Ecological Transition Teresa Ribera said on her way to the meeting.

      For her part, French Energy Minister Agnes Pannier-Runacher stressed that a "structural reform" was needed, while Polish Environment Minister Anna Moskwa said the proposal was "a kind of joke" that did not satisfy any country.

      On Tuesday, after months of work by member states, the EU executive had proposed a mechanism that would be triggered if the Dutch TTF index price (the reference price for the most common gas price in the EU) exceeded E275 euros per megawatt hour for two consecutive weeks, among other conditions.

      Critics point out that this criterion was not even met during the record peak in August, when Russia halted supplies through the Nord Stream 1 pipeline, a major supply route linking Russia to Germany.

      "The market is not working," Greek Energy Minister Konstantinos Skrekas said on Thursday, adding that a ceiling of E150 to E200 would be realistic to reduce gas and electricity prices. He noted that it was a good time to test the mechanism before next winter because EU gas storage was full.

      About half of the bloc's 27 member states want a price cap, saying intervention is needed to protect households and businesses facing unsustainable bill increases in the wake of the war in Ukraine.

      Russia, formerly Europe's largest supplier of natural gas slashed deliveries to the bloc in response to sanctions imposed on Moscow in support of Kiev.

      Other members of the community, led by Germany and the Netherlands, warn that even a weak cap could scare off EU gas suppliers or discourage a needed reduction in the use of the climate-damaging fossil fuel.

      "There is a great risk of damaging the security of energy supply and also the stability of the financial market," Dutch minister Rob Jetten said.

      European Energy Commissioner Kadri Simson said EU officials had acted in accordance with the mandate handed to them by member states.

      Gas and electricity prices have soared in much of the European Union over the past year. According to the European Council, gas prices in the bloc rose by more than 150% between July 2021 and July 2022.

      The skyrocketing energy increases are a huge burden for industry and private households, and in several EU countries a recession is expected in the coming months.


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