EU proposes to cap ‘excessive and volatile’ gas prices this winter

theguardian.com:

The EU has proposed a cap on “excessive and volatile” gas prices this winter as part of a package to protect consumers.

Brussels has put forward a new mechanism to control prices by blocking transactions above a certain level, which can be triggered “when needed”.

European policymakers are attempting to insulate households from the worst of the impact from Russia’s invasion of Ukraine, which has sent wholesale gas prices soaring.

The package of measures, agreed by the EU commissioners on Sunday and announced on Tuesday, included emergency regulations to allow joint gas buying across the EU to negotiate better prices and provisions to permit greater cooperation between countries in a gas supply emergency.

EU leaders will discuss the proposals at a summit lthis week and if approved the cap could come into force this winter.

The European Commission has devised the plan to create a new benchmark for gas prices to better reflect the price of liquefied natural gas and de-link prices from the the main European gas exchange, the Title Transfer Facility (TTF) Dutch gas hub.

However, this scheme is expected to take time to implement, so the option to put a cap on prices will be introduced in the interim. It will block transactions from taking place on the TTF at a price higher than the “dynamic price limit”.

Gas is trading at more than 200% higher than this time last year on the TTF exchange after Russia slashed gas supplies into Europe in response to sanctions against the Kremlin.

The commission is also proposing to support energy traders who could be exposed to volatile prices in an echo of the support devised by the Treasury and the Bank of England in the UK.

The commission’s president, Ursula von der Leyen, said: “Russia’s war on