Eight CEE countries push for ‘significantly lower’ EU gas price cap

A total of eight Central and Eastern European (CEE) countries have co-signed a paper with four other EU member states that calls for the EU-wide cap on gas prices to be “significantly lower” than is currently being considered.

Gas prices – and consequently inflation – have spiked in Europe since Russia’s invasion of Ukraine on 24 February, although other factors have also been in play.

The current proposal on the table would cap bloc-wide gas prices of over EUR 220/MWh as per the benchmark Dutch Title Transfer Facility (TFF) after five days, below the EUR 275 proposed by the European Commission.

The CEE countries backing lowering the cap, which EU-27 countries have been debating for months, are Poland, Romania, Slovakia, Bulgaria, Croatia, Latvia, Lithuania and Slovenia, newswire Reuters reports. The other four countries are Belgium, Greece, Italy and Malta.

The group of 12 EU member states argue that the suggested level is too high – the TTF was trading at around EUR 135.50 on Friday – and would be unlikely to be triggered.

The proposed figures are well above the average price level of EUR 140 but lower than this summer’s peak, Bloomberg notes. The group of 12 comprise a large enough group to block approval of any cap.

Energy ministers to meet Tuesday

The EU member states convened for emergency talks regarding the gas price cap on Saturday, 10 December. Ahead of a meeting of their respective energy ministers on Tuesday, diplomats will hold further talks today (Monday, 12 December).

“We hope this will close at the ministers’ level next week. But there are still discussions on the sidelines. We will see,” an official working for an EU prime minister told CNBC on condition of anonymity on Thursday. Another unnamed Brussels-based official told the US TV channel that “consensus seems very much out of reach”.

ECB concerned on impact on stability

The European Central Bank (ECB) said in a document on Thursday that it “acknowledges that mechanisms aimed at moderating extreme price levels and volatility in wholesale gas markets may, in principle, alleviate a number of risks to financial stability, including the risks exposed during periods of elevated and volatile gas prices in 2022.

“However, the ECB considers that the current design of the proposed market correction mechanism may, in some circumstances, jeopardise financial stability in the euro area,” it added.

Germany is amongst the countries that opposes the cap, arguing that it could reduce motivation for gas suppliers to sell gas to Europe.

Czech Industry and Trade Minister Jozef Sikela meanwhile tweeted that he has met leaders of those companies that run the Czech national grid and gas transmission system and was assured that the energy industry “is well prepared (and) government measures and individual savings will ensure a peaceful winter”.