The Diplomat
The Third Vice President and Minister for Ecological Transition and the Demographic Challenge, Teresa Ribera, celebrated yesterday the political agreement reached by EU Energy Ministers to establish a temporary mechanism to limit excessive gas prices, in line with the position of the Spanish Government.
The extraordinary Council of Energy Ministers of the European Union reached yesterday in Brussels a political agreement establishing a market correction mechanism to protect citizens and the economy against excessively high prices. The regulation agreed by the ministers aims to limit excessive gas prices in the EU that do not reflect international market prices, while ensuring the security of energy supply and the stability of financial markets.
The correction mechanism will be triggered automatically, for a period of twenty days, in the event that the gas price exceeds €180 per megawatt-hour (MWh) or exceeds the average reference price of liquefied natural gas on international markets by €35 for three consecutive working days, the EU said. The mechanism will apply from February 15, 2023, for a period of one year. The agreement contains safeguards to be able to deactivate the price ceiling in case of supply problems or risks to financial stability, among other adjustments.
“Finally! We have just reached an agreement to establish a mechanism to facilitate a correction of natural gas prices if they shoot up again,” Ribera stated via her official Twitter account. This mechanism, she continued, “will protect household and industry bills from soaring energy costs” and allow “Europe to take a stand against speculative market behavior.”
“It has been an intense but very positive day,” the vice-president told journalists at the end of the meeting. “We have been asking for almost a year to be able to develop a joint platform system, to be able to set a reference, to give a signal to the markets about what is the maximum price that Europe is willing to pay for gas above the average price of international markets, but not just any price,” she recalled. “Today we have managed to agree on this gas market correction system for exceptional situations where gas rises to such a level that it distances itself enormously from the average price on the international markets,” she celebrated.
“We have reached an important agreement that will protect citizens from escalating energy prices,” said, for his part, Czech Minister of Industry and Trade Jozef Síkela, whose country holds the rotating Presidency of the EU Council. “We will establish a realistic and effective mechanism, including the necessary safeguards that will steer us away from risks to security of supply and the stability of financial markets,” he continued. “Once again, we have shown that the EU is united and will not allow anyone to use energy as a weapon,” he added.
The agreement is the direct result of the mandate approved last December 15 in Brussels by the European Council for energy ministers to reach a final agreement on the gas price cap. At the end of that meeting, the President of the Government, Pedro Sánchez, recalled that, at the European Council last October, a mandate had already been given to the Commission and the Council “to immediately limit episodes of excessive natural gas prices”. However, after two months, and in the absence of definitive results following last Tuesday’s Extraordinary Energy Council, European leaders decided to approve a new mandate that would include clear guidance on the key elements of the package, such as, for example, the concept of “excessive price”.
