News is coming through that European Union energy ministers have agreed to a gas price cap, which can be triggered from February 15.
According to the Reuters news agency, it ends weeks of talks on the emergency measure as leaders try to find a remedy for the continent’s energy crisis.
The cap is the 27-country EU’s latest attempt to lower gas prices that have pushed 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 ($191.11) 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.
The TTF price must also be 35 eur/MWh higher than a reference price based on existing liquefied natural gas (LNG) price assessments for three days.
“We have succeeded in finding an important agreement that will shield citizens from skyrocketing energy prices,” said Jozef Sikela, industry minister for the Czech Republic, which holds the rotating EU presidency.
The cap can be triggered starting from Feb. 15, 2023. The deal will be formally approved by countries in writing, after which it can enter into force.
Once triggered, trades would not be permitted on the front-month, three-month and front-year TTF contracts at a price more than 35 euros/MWh above the reference LNG price.
This effectively caps the price at which gas can be traded, while allowing the capped level to fluctuate alongside global LNG prices – a system designed to ensure EU countries can still bid at competitive prices for gas in from global markets.
Germany voted to support the deal, despite having raised concerns about the policy’s impact on Europe’s ability to attract gas supplies in price-competitive global markets, three EU officials said.
It shows the Albanese government is not alone.
Last week, it passed legislation that will impose a temporary 12-month price cap of $12 a gigajoule on uncontracted gas on the east coast, as part of a suite of measures to prevent energy prices rising even further in the short term.
