European Commission has officially proposed to limit price of gas
The European Commission has released a formal proposal for what could soon be the first-ever gas price cap in EU history.
The proposal was presented by the European Commissioner for Energy, Kadri Simson, Censor.NET reports with reference to European Pravda.
"This is not a regulatory intervention to set the market price at an artificially low level," said Kadri Simson.
"This is a mechanism of last resort to prevent and, if necessary, resolve episodes of excessively high prices that do not correspond to global price trends," she emphasized.
The European Commission proposed to set the upper limit of wholesale gas prices for a month ahead at the level of 275 euros per megawatt-hour. However, the cap will only apply if prices are above this level for two weeks and are more than €58 per MWh higher than the 10-day average LNG price.
"It's not a silver bullet. But it provides a powerful tool that we can use when we need it," Kadri Simson said.
According to the Financial Times, critics called the plan almost useless.
Wholesale gas prices jumped to an all-time high in the summer, exceeding 300 euros per MWh, after Russia cut supplies through its biggest route to Western Europe, Nord Stream 1, to Germany. Even then, the upper limit would not work, as prices remained above €275 per MWh for only about a week.
"It's a joke... It's a proposal that won't do anything good for anyone, even in the extreme scenario we saw in August. It's not a cap," said Simone Tagliapetra, a senior fellow at the Bruegel think tank in Brussels.
"This seriously risks undermining the Commission's confidence in solving the energy crisis," he added.
Several diplomats from member states who support the price cap told the Financial Times that it was too high for their governments. One senior EU diplomat said setting a price above €250 per MWh "is another way to destroy the cap".
