Belgium, (Brussels Morning Newspaper) EU member states are thinking about lowering the proposed gas price cap ahead of the meeting of energy ministers.
Bloc members have been discussing the plan for months and held two emergency ministerial meetings on the topic, but still do not agree on the proposed measure, according to Reuters reporting on Sunday.
The Czech Republic drafted the new proposal according to which the price cap would be triggered if front-month prices at the Title Transfer Facility (TTF) stay above 188 euro per MWh for three consecutive days.
This is in contrast with the EC’s earlier proposal that placed the threshold at 275 euro per MWh, which some bloc members rejected as too high. The group including Belgium, Greece and Poland stressed that the price cap must be below 200 euro per MWh in order to rein in prices.
The largest gas consumers in the bloc – Austria, Germany and the Netherlands – oppose the planned cap, warning that the move could disrupt energy markets and drive cargoes away from the EU.
If triggered, the price cap would prevent purchases at a price higher than 35 euro per MWh above a reference price based on liquefied natural gas (LNG) price assessments.
According to the latest proposal, which the Czech Republic presented on Saturday, the price cap would be pegged at 188 euro per MWh even if LNG prices were significantly lower.
Flexible cap
If LNG prices rise above the cap, it would follow the prices but remain 35 euro per MWh above them. This would allow EU member states to attract shipments by biding above market prices.
Besides some bloc members, market participants including the US Intercontinental Exchange (ICE) have criticised the proposed price cap, stressing that the move could backfire and drive up prices.
Gas prices in the EU spiked as volumes shipped via pipelines from Russia dropped, adding to rising inflation.
EU energy ministers are to meet later today to discuss the proposed cap and attempt to reach an agreement on the planned measure, which some bloc members see as a solution and some warn it could exacerbate the crisis.
