- Germany supports deal after previous opposition
- Price cap of 180 euros/MWh can be triggered from Feb. 15
- Cap kicks in if prices exceed 180 euros
BRUSSELS, Dec 19 (Reuters) – European Union energy ministers on Monday agreed a gas price cap, after weeks of talks on the emergency measure that has split opinion across the bloc as it seeks to tame the energy crisis. The cap is the 27-country EU’s latest attempt to lower gas prices that have pushed citizens’ energy bills higher and driven record-high inflation this year after Russia cut off most of its gas deliveries to Europe. Ministers agreed to trigger a cap if prices exceed 180 euros per megawatt hour for three days on the Dutch Title Transfer Facility (TTF) gas hub’s front-month contract, which serves as the European benchmark, EU officials and a document seen by Reuters showed. The cap can be triggered starting from Feb. 15 2023, the document detailing the final deal showed. The deal will be formally approved by countries in writing, after which it can enter into force. Under the current proposal, the EU price cap would not fall below €188/MWh, even in the event that the LNG reference price falls to far lower levels. However, the EU gas price cap would move with the LNG reference price if it increased to higher levels, while remaining €35/MWh above the LNG price. This system is designed to ensure the bloc can bid above market prices in order to attract gas in tight markets. Once triggered, the cap will prevent trades being done on the front-month to front-year TTF contracts at a price higher than €35/MWh above a reference price that comprises existing LNG price assessments. Previously, the EC planned to tie benchmark European gas futures prices to the price of liquefied natural gas on the spot market. The “safety price ceiling” would be triggered automatically, when “the front-month TTF derivative settlement price exceeds €275 for two weeks” and, second, when “TTF prices are €58 higher than the LNG reference price for 10 consecutive trading days within the two weeks.” Both moves caused trepidation amongst gas traders. “Even a short intervention would have severe, unintended and irreversible consequences in harming market confidence that the value of gas is known and transparent,” said the European Federation of Energy Traders.
NN: This will not take effect until the spring when Europe will refill storage tanks depleted by winter. This year the peek in natural gas prices occurred in August when they filled on a emergency bases. Paying stupid money as they bid against each other in a panic. The goal of the caps is to to avoid another cluster fuck this time…. It won’t work. But at lest the pompous prick Gazpacho eaters in Brussels can pretend they did something. They are desperate to justify their existence as they eat their Christmas goose and toast their brilliance.