Page 12 - FSUOGM Week 42 2022

FSUOGM POLICY FSUOGM

Brussels puts off gas price cap proposal

in latest measures to ease energy crisis

EUROPE THE European Commission has proposed a raft pipeline gas prices, no longer reflects the market
of new measures to tackle soaring energy prices, adequately since the loss of significant Russian
There is still a lot of but has avoided suggesting an immediate cap on supply and a surge in LNG imports. A separate
disagreement among gas prices as member states remain divided over proposal will pave the way for EU countries
member states. the issue. to make joint purchases of gas for storage, to
Most member states say they want the cap to expand stored volumes ahead of winter next year
be imposed on the price that is paid to wholesale and have greater leverage to secure lower prices.
suppliers. But others fear that it will further exac- Countries would need to buy no less than
erbate supply shortages, by creating an incentive 15% jointly of the volume of gas needed for the
to supply their gas instead to markets that offer a EU to meet its storage target of 90% capacity by
higher price. Discussions over the proposal have the start of November nast year. It will be up to
dragged on for months. national governments to get companies in their
Rather than set out a clear proposal, the Euro- countries to participate in the system.
pean Commission said on October 18 it would “We know that we are strong when we act
ask EU countries for their approval to draft plans together … the member states and the energy
for a temporary “maximum dynamic price” on companies should leverage their joint purchas-
transactions at the Dutch TTF gas hub, which is ing power,” European Commission President
the main benchmark for European gas trading. Ursula von der Leyen commented.
But the Commission added it would only con- Meanwhile, the Commission also suggested
sider this a “last-resort measure,” and that the energy companies could get bank or public guar-
price limit would need to fulfil conditions. antees to cover “margin calls” on energy trans-
Other measures that the Commission pro- actions, as the energy crisis has left some firms
posed included curbing prices by adjusting struggling to do this only with gas.
energy market rules. Trading venues would be Furthermore, the Commission wants the
required by January 31 to introduce upper and almost €40bn ($39bn) of unspent bloc budget
lower price limits each day on front-month gas funds to be set aside for vulnerable citizens and
contracts to reduce volatility. businesses struggling with high prices.
The Commission has also called on energy The proposals will be discussed by EU
regulators to introduce an alternative bench- national leaders on October 20 and 21, and could
mark price for LNG by the end of March next well hit a deadlock or could be altered during the
year, recognising that TTF, mainly based on course of negotiations. ™

P12 www. NEWSBASE .com Week 42 20•October•2022