The EU has already agreed on the collection of excessive profits from some electricity producers – but that is not enough to relieve consumers in the face of horrendous energy prices. On Tuesday, the EU Commission will present new proposals on how a further increase in electricity and gas prices could be prevented. An overview:
The EU Commission wants to change the Dutch market index TTF, which is used as a reference for many gas sales contracts. According to the Brussels authorities, the TTF also rose as a result of speculation by investors and thus “artificially” drove up prices. Another index that is more representative of actual care is to be created within six months.
Until then, the Commission intends to use a “temporary mechanism” – what an EU source says is a “dynamic corridor”, a framework for price volatility in the TTF market that would smooth out the ups and downs in gas prices.
The EU Commission will promote increased joint gas purchases by the member states. This proposal is already on the table, but the EU Commission wants to get more countries to participate in order to create more market power and achieve better prices. This is also intended to prevent competition between the EU countries.
In addition, Brussels wants to intensify negotiations with “reliable” suppliers such as Norway and the USA. The Commission is also likely to encourage greater private sector involvement. This could be done by a buyer “cartel” bringing together the importing energy companies.
Although individual countries have already saved energy, the Commission wants to further reduce gas consumption. In addition, solidarity is to be strengthened with countries that are prone to bottlenecks and have not made any agreements with their neighbors to secure supplies. Around the beginning of September, Germany and France agreed on mutual energy supplies.
Joint steps to limit gas prices have been the subject of debate in Europe for months. A price cap on gas used to generate electricity, which France and other countries are calling for, is reportedly not part of the latest Commission proposals.
The system, already in use in Spain and Portugal, consists in reducing electricity suppliers’ gas bills (the difference with the market price is covered by a government subsidy) in order to lower electricity prices. However, Germany and the Netherlands have so far resisted such market interventions.
Nevertheless, the heads of state and government could agree at the EU summit on Thursday and Friday to examine a price cap for gas used to generate electricity. According to a draft of the summit conclusions, such a price cap should not “lead to an overall increase in gas consumption”.
