The new battery will include the reform of the benchmark price index, the Dutch TTF, because it “artificially inflates prices”
The European Commission will also propose to launch the joint gas purchasing platform in 2023 and more gas savings
The decisions taken so far by the European Union to curb the energy crisis have not been enough and the Twenty-seven accelerate contacts and preparations to adopt a new battery of measures that will help lower gas prices. As announced by the energy commissioner, Kadri Simsonthe European Commission will present this next tuesday october 18 a new package of measures that will include a “temporary mechanism” to limit the price of gas, while reviewing for next year the Dutch price index TTFa joint purchasing platform that allows taking advantage of the joint purchasing power to limit prices and new measures to reduce the consumption.
“Immediately after the start of the war we proposed to end Russia’s energy dependency. In the spring we launched a joint (gas) storage strategy. In July we agreed to reduce gas demand and last week the Council agreed to reduce electricity demand (…) But it is clear that further action is needed because prices are still unsustainably high, Russian pipeline gas flows have fallen by below 10% and attacks against EU infrastructures have increased uncertainty & rdquor ;, Simson acknowledged after the informal meeting of energy ministers in Prague.
Simson took advantage of the meeting to discuss with the Twenty-seven the new battery of measures that will come to light two days before a new summit of European leaders on October 20 and 21 who called for “concrete and clear” proposals last Friday. In the first place, and as countries like Spaina, the European Commission will undertake to present a legislative proposal to reform the gas price index, the Dutch TTF (Title Transfer Facility), which is the main reference for negotiating contracts in Europe. “It is no longer representative of the reality of the EU energy market and artificially inflates prices. We need to develop an alternative benchmark and the Commission is preparing a legislative proposal to that effect. Next week we will explain in more detail what it would mean & rdquor ;, explained the curator.
Given that this measure will not have an impact at least until the next tank filling season, the European Commission hopes to achieve a price reduction and better conditions through the negotiation with partners considered reliable. It is the case of Norway, whose minister has participated in the meetings in Prague; either Algeria, a country that Simson has visited this week. That remains the preferred option, but Brussels admits that it is necessary to be prepared in case the negotiations do not come to fruition quickly and for this reason it will also suggest “a temporary mechanism to cap prices”. “As part of the next package, we will expose how this mechanism could work and how to mitigate the risks that it inevitably entails & rdquor ;, he announced without giving any precision.
More gas savings
Second, the new plan will also include new measures to further reduce gas demand. One option would be to activate the EU alert, which would make the 15% demand reduction target mandatory. But Brussels is not ruling out different approaches or more measures to ensure that the level of savings is sufficient. In any case, “any measure to lower prices must not send the wrong signals that cause consumption to increase throughout the EU,” the commissioner warned.
The intention of Brussels is to include in the new battery solidarity measuresso that all Member States have this type of agreement in case of supply problems, and the implementation of joint gas purchases in 2023 about what there is, according to the Czech energy minister, Jozef Sikela, a general consensus. “This will allow the EU to use our collective purchasing power to limit prices and prevent member states from competing with each other in the market and, in doing so, driving up prices & rdquor ;, estimates Simson about a measure also called to help the smaller or disadvantaged EU countries when it comes to negotiating.
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What is not yet clear is whether the initiative will include a cap on the price of gas used to generate electricityin line with lexcept Iberian of Spain and Portugal, as suggested last week by the President of the European Commission, Ursula von der Leyen, and that France claims tooth and nail. “The proposal will include aspects in which we have the maximum consensual support, so we will see how we can proceed with the limitation of gas for power generation, if there is a majority in that phase,” said the commissioner. The idea, for example, is still not liked or the Netherlands or Germany. “Measures in the electricity sector that can increase gas demand and that target inframarginal rents must be considered very carefully and include load sharing & rdquor ;, warn Berlin and The Hague in a joint document.
In parallel, the Commission is also working on a electricity market reform. According to his forecasts, the idea is to present the first results with the main elements of the reform at the end of the year and launch a debate with the Twenty-seven thereafter with a view to presenting a legislative proposal at the beginning of 2023.