EPA
ANNOUNCEMENTS••Edited
After more than a year of negotiations, the European Union’s energy ministers have agreed on a maximum gas price. The ‘market correction mechanism’, as it is called in Brussels, comes into force when the price of gas exceeds 180 euros per megawatt hour. The measure is expected to go into effect on February 15.
It has become a compromise, because the new measure is not a fixed maximum price for gas. The mechanism enters into force if the price of gas exceeds 180 euros per megawatt hour for three working days. If the price of gas continues to rise, countries may not offer more than €35 per megawatt hour above the average price. The price of gas is currently around 107 euros per megawatt hour.
For example, if the price of gas were to rise to €300 per megawatt hour, EU countries could still offer €335 on the energy market. The purchase price of gas is therefore not fixed. The hope is that this measure prevents European countries from outdoing each other and themselves causing a huge increase in the price of gas.
Crazy chickens
This happened last summer when countries wanted to get their stockpiles up to at least 80 percent. As countries competed with each other, people paid much more for gas in Europe than, say, in Asia or the United States. “It’s a signal to the market that we won’t be beating each other like crazy to get gas to Europe,” says Minister Rob Jetten.
The impact of the measure on the energy bills of households and businesses will most likely be limited. This measure is nothing like the government price cap. Soon energy companies will reduce the bills of companies and households and will be compensated by the government. The European ceiling concerns the purchase price of energy companies in Europe.
European energy companies cannot outbid themselves indefinitely after the cap enters into force if the price of gas exceeds 180 euros. The Netherlands and Germany have therefore been staunchly against a gas price ceiling for a long time. The fear is that European energy companies will be outbid by offers from countries outside the EU just when gas is needed most.
Belgium and Italy, among others, considered these risks manageable. Germany has changed its mind today. Only Hungary voted against. The Netherlands and Austria abstained.
According to Jetten, more gains can be made through other measures agreed by ministers. For example, EU countries will jointly buy gas from 1 January. Permits, among other things, for large wind farms must be granted more quickly.
