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    Spain and 11 other countries call for speeding up debate on EU gas price cap

    September 27, 2022 - CE Noticias Financieras


      Twelve countries are calling on the European Commission to present a proposal to cap gas prices. This Friday there is an extraordinary meeting of EU energy ministers in Brussels, and Spain and 11 other countries are beginning to have doubts that the EU executive will arrive on time with a plan to limit the price of gas, which is being delayed.

      EU energy ministers asked the European Commission on September 9 to limit electricity profits, cap gas prices, reduce electricity consumption and help households and businesses. Brussels presented its proposal on September 14 to limit company profits and reduce electricity consumption, but has not yet presented anything on gas prices and another issue of concern to the ministers: providing liquidity to the energy futures markets.

      Josef Sikela, Czech Energy Minister, the country holding the rotating presidency of the EU Council, explained: "We now know the path we want to take: the current level of energy and electricity prices generates inflation and harms the European economy, weakens competitiveness and generates social tension. There are four areas that Member States expect the European Commission to present legislative measures in the coming days. The four areas are: limiting the revenues of electricity producers with low production costs, with solidarity investment from fossil fuel companies; we expect the Commission to introduce urgent intervention to limit the price of gas; also measures for a coordinated reduction in electricity demand. The ministers also called for measures to help solve the problem of liquidity [state aid] in the futures markets".

      Well, with only a few days left, Belgium has launched an initiative, in the form of a letter addressed to the European Commissioner for Energy, Kadri Simson, to call on the European Commission.

      "The energy crisis that began last autumn has worsened over time and is now causing unsustainable inflationary pressures that are hitting our homes and businesses hard," begins the letter, which has been accessed by and is pending to be sent to the EU executive: "We recognize the efforts made by the Commission and the measures it has proposed to address the crisis. But we still have to address the most serious problem of all: the wholesale price of natural gas. The price cap that has been requested from the outset by a growing number of Member States is the only measure that will help mitigate inflationary pressure, manage expectations and provide a framework in case of possible supply disruptions, and limit extra profits in the sector."

      According to the signatories of the letter, Spain, Italy, Poland, Greece, Belgium, Malta, Lithuania, Latvia, Portugal, Slovenia, Slovakia, Croatia and Romania, "the cap should apply to all wholesale natural gas transactions [including liquefied natural gas], and not be limited to imports from specific jurisdictions [Russia]. It can be designed in a way that ensures security of supply and free flow of gas within Europe, while achieving our common goal of reducing gas demand. This cap is the priority and can be complemented by proposals to strengthen financial oversight of the gas market and develop alternative benchmarks for gas pricing in Europe."

      Accordingly, the undersigned ministers call on the Commission to "present a proposal to this effect for discussion at the extraordinary Energy Council on September 30, to be followed by a legislative proposal as soon as possible."

      Brussels' proposals so far

      Brussels has approved its proposal for emergency intervention in the energy and electricity market. Although it is still asking for more time to define the gas price caps and to provide liquidity to the financial futures markets, on Wednesday it presented at the European Parliament in Strasbourg how it wants to raise up to 142 billion with caps on super-profits from infra-marginal industries - such as renewables - and fossil fuel industries.

      "In the times we live in, it cannot be that some are making extraordinary and unprecedented profits thanks to war and at the expense of consumers. In these times, profits must be shared and channeled to those who need them most," said European Commission President Ursula von der Leyen to the plenary of the European Parliament during the State of the Union debate in Strasbourg.

      The proposal for the regulation on an electricity emergency tool and a contribution from the fossil sector is based on Article 122 of the Treaty on the Functioning of the European Union, which bypasses the European Parliament. As such, the proposal requires a qualified majority vote in the Council - the governments - to be approved, and its adoption will depend on the internal procedures of the Council, which meets in extraordinary session on September 30 in the format of energy ministers.

      "The proposed measures are of an extraordinary nature and should therefore be of limited duration," says the European Commission: "The electricity emergency tool should be implemented at the latest by December 1, 2022 and until March 31, 2023. The European Commission has committed to carry out a review of the electricity emergency tool by 28 February 2023, taking into account the electricity supply situation and electricity prices across the EU , and to submit a report on the main conclusions of that review to the Council."

      The so-called solidarity contributions from the fossil sector, i.e. the windfall profits levy, "shall apply for one year from their entry into force. The Commission shall carry out a review by 15 October 2023, in view of the overall situation of the fossil fuel sector and the excess profits generated, and submit a report on the main findings of that review to the Council."

      Room for maneuver

      Brussels leaves room for countries to implement part of its proposals, but governments want even more. According to drafts seen by EURACTIV, this includes allowing countries to "set a specific limit" on coal revenues, setting a higher revenue limit for producers with investment and operating costs "higher than the Union-wide limit" and exempting energy production used at peak hours as a "supplier of last resort."

      Along with these changes, more than 15 countries are still "looking for more room within different parts of the three proposals to accommodate national measures that already exist," according to a diplomatic source.

      The Commission's proposal even highlighted the dangers of having "uncoordinated caps" that "may generate significant distortions between generators in the Union, as generators compete across the EU in a coupled electricity market."


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