Gas price cap absent from latest EU energy measures
The European Commission unveiled on October 18 a new package of measures to tackle soaring energy costs, however a concrete proposal for imposing a price cap on wholesale gas supply was not among them, amid ongoing disagreement between member states over the move.
In a statement, European energy commissioner Kadri Simson proposed tools to make the joint purchasing of gas supply possible in order to give the EU greater leverage in supply talks. First, demand for gas will be aggregated, pooling the needs of companies willing to participate, and then the commission will contract the procedure out to a service provider that can collect the data. Companies can then conclude contracts with suppliers, potentially forming a gas purchasing consortium.
The aggregated amount of gas must be equivalent to 15% of gas storage volumes, or around 13.5bn m3 block-wide. Companies will then be free to buy more than this threshold.
Simson also called for the EU to adopt a better price benchmark than that at the Dutch TTF gas hub, which the commission has said is based too greatly on pipeline gas supply. Since losing much of its Russian pipeline gas, the EU is now more reliant on LNG imports. The commission has asked ACRE to prepare a price assessment tool, giving them the power to collect real-time data on LNG transactions, with the aim of establishing the new benchmark by the end of March next year.
The commissioner additionally proposed a mechanism to limit prices when needed – a TTF cap. But she cautioned that "more work is needed, in cooperation with the member states, to develop the details.
EU member states have been discussing the gas price cap for months, but there is little consensus on what form it should take. While a majority of countries want it introduced to the price that is paid to suppliers, others including Germany warn that this could further tighten supply, by encouraging suppliers to sell their gas elsewhere. Instead, Berlin wants national governments to subsidise the wholesale price, placing a significant financial burden on themselves.