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Wednesday, November 30, 2022

Gewessler cautious about gas price cap for European wholesalers

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“I think it’s important to leave no stone unturned to lower gas prices,” Gewessler said before a special meeting with her EU colleagues in Brussels on Thursday. But at the same time, the security of supply argument must be taken seriously. Gewessler expects “intense” debates on this proposal.

The EU Commission wants to curb particularly severe price swings in European wholesale through a price cap. This affects certain transactions at the wholesale center TTF, to which many supply contracts in the EU are linked. Specifically, the cap would apply automatically if the price for gas to be delivered in the following month exceeded 275 euros per megawatt hour (MWh) for two weeks and at the same time was at least 58 euros higher than the reference price for liquefied natural gas (LNG) on the world market.

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While countries like Germany or the Netherlands expressed similar skepticism as Austria, the price cap does not go far enough for many other EU countries. “We are certainly in very different positions in Europe in this crisis,” said Gewessler. As a landlocked country, Austria does not have the opportunity to set up LNG terminals on the coast, but is dependent on pipelines. The different supply structures “of course make the management of this crisis more challenging,” said the energy minister.

The German Economics Minister Robert Habeck meanwhile rejected criticism of the German position on a European gas price cap. “We do not block,” said the Green politician to the “Handelsblatt” according to the German Press Agency on Thursday. The EU states have agreed on a flexible and clever cap for times of excessive prices. “But I’m skeptical when it comes to a fixed price cap in the market because it would be either too high or too low.”

Gewessler emphasized that on Thursday in Brussels there would be no decision on the “market correction mechanism” mentioned by the EU Commission. However, ministers are expected to agree on the less controversial issues of joint gas purchasing and accelerated approval processes for renewable energy. Gewessler is pushing for “concrete resolutions” here, saying that “nails with heads” must be done. The outcome of the meeting is still unclear in view of the gas price cap dispute.

However, the “Iberian model” long demanded by Austria is not on the agenda today. However, the EU should not lose sight of the decoupling of electricity and gas prices, the model “will also help us in the longer term,” says Gewessler.

Source: Nachrichten

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