Fifteen countries criticize the market correction mechanism designed by Brussels because it sets a ceiling of 275 euros/MWh that is too high
Energy ministers will face a complicated Energy Council this Thursday in Brussels, with widely divided positions on imposing a gas cap, set at 275 euros per megawatt hour (MWh) in the mechanism proposed by Brussels. The proposal for a corrective market mechanism has not satisfied any of the twenty-seven: the most ambitious – such as Spain, Portugal, Greece, Italy … – find it ineffective and a “plague”; and those most reluctant to intervene in the energy market – Germany and the Netherlands – also criticize it as unnecessary. “We are concerned about the European Commission’s slow response,” said Third Vice President and Minister for Ecological Transition, Teresa Ribera.
The Brussels tool would be automatically activated in case of exceptional price increases based on the Dutch TTF reference index and would limit costs to one month in advance, which would have an impact on the regulated market. This activation would be subject to two variables: the gas price should exceed EUR 275 for two weeks and the difference between the price on the European and the world market should be at least EUR 58 for ten of those fourteen days. The tool, which was due to be launched on January 1, also includes an “emergency brake” safeguard, in case it causes “serious disruptions” to the market or jeopardizes security of supply.
The tool activation requirements have been the source of criticism from countries such as Spain or France, which find them too restrictive. “It has serious design, price and condition issues. Such a high price cannot be demanded. In practice, it could never be applied,” Ribera stressed. As designed, the mechanism would not even have been activated in the episode with the highest price spikes, in August, when the gas price exceeded 300 euros MWh for a week.
According to the Spanish minister, “a dynamic price” should be set for European gas, based on that of other international markets, “if not, it could have the opposite effect and cause prices,” she added. However, he points out that the European Commission’s proposal is “a starting point” for discussing and refining it at a technical level.
The demands to activate the mechanism have led to criticism from the 15 countries – including Spain – who have pressured the Commission to bring to the table a tool to cap gas prices after the period of volatility last August, when the peak more than 320 euros per megawatt hour (MWh). “The high price and the big difference with other references make it practically unfeasible”, Teresa Ribera assured of her presentation the same day.
His Polish counterpart pointed out that as it is presented, “no country pleases. It’s a bit of a joke.” For his part, the Italian minister, entering the meeting, emphasized that “there is a group of 15 countries that have agreed not to comply with the Commission’s proposal”.
Apart from the gas limit, the Twenty-Seven will debate the solidarity scheme for joint gas purchases and the acceleration of the deployment of renewable energy sources.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
