London, Europe Brief News – The idea of imposing a price cap on gas imports and transactions is set to top the agenda of an informal meeting of EU leaders in Prague.
It comes a day after the European Political Community, which gathered more than 40 European heads of state and government from all over the continent, including the UK, Norway and Turkey.
On Friday, it will be just the 27 EU countries around the table, with one main question up in the air: how can the bloc curb soaring gas prices.
A letter penned by European Commission President Ursula von der Leyen is expected to serve as basis for discussions.
New set of emergency measures
On Wednesday, von der Leyen suggested a new set of emergency measures to tame the skyrocketing electricity bills that households and companies are facing, which are strongly driven by gas, the most expensive fuel needed to meet all power demands.
The first cap should apply to market transactions that take place every day at the Dutch Title Transfer Facility (TTF), Europe’s leading trading hub, in a bid to contain speculation.
The second cap should target the price of gas that is used only for the production of electricity. This appears to be similar to the Iberian model already adopted by Portugal and Spain, which partially covers the huge costs bore by gas-fired power plants.
In her letter, von der Leyen said that both caps represent a profound intervention in the market and entail risks for the bloc’s security of supply. If EU countries are willing to accept these measures, they must agree on stricter savings plans and sign legally-binding solidarity deals to cope with potential shortages.
“We need to acknowledge the risks that a cap on gas prices entails and put in place the necessary safeguards,” von der Leyen said.
The Commission chief also proposed a new benchmark for trading liquefied natural gas (LNG) and a joint procurement scheme for next winter to prevent countries from outbidding each other.
