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EU energy ministers argue about gas price caps: too strict? Too lax?

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“It’s a joke after so many weeks of discussions. It’s minus ten degrees,” said Polish Energy Minister Anna Moskwa after the EU Energy Council meeting on Thursday. Moskva is an advocate of a wholesale gas price cap on the gas exchange. However, the ministers were unable to agree on such a cap. On the contrary: the dispute escalated during the meeting. Negotiations are to continue on December 13th.

As reported, the EU Commission has proposed a price cap. 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.

disunity in Europe

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While countries such as Germany or the Netherlands expressed similar skepticism as Austria, the price cap does not go far enough for many other EU countries such as Italy, France, Malta, Belgium and Poland. “I think it’s important to leave no stone unturned to lower gas prices,” said Austria’s Energy Minister Leonore Gewessler. But at the same time, the security of supply argument must be taken seriously.

The argument of the opponents of a price cap: If the public actually intervened in the pricing, suppliers could offer and sell their gas somewhere else. There would be a gas shortage in Europe. The German Secretary of State Sven Giegold explained: For Germany it is “important that the markets do not get confused, but instead we tackle the causes of the high prices,” said Giegold. This is due to the dependency on Russian gas, the shortage of gas and high consumption.

“Placebo Correction Mechanism”

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”.

The price cap is a “placebo correction mechanism. It would not have made a difference at any time during the crisis. The prices in the past few months would not have been affected at all,” says AK energy expert Josef Thoman.

Experts argue that the mechanism would not have been triggered in August had it already existed, since the price limit was not breached for two weeks. On August 26, the gas price on the TTF reached its high of 340 euros per megawatt hour; it is now around 130 euros.

In Austria, the SPÖ, FPÖ, but also Chamber of Commerce President Harald Mahrer are calling for a price cap, as decided by Germany.

Expansion in Croatia

Croatia wants to expand its liquid gas terminal in Krk beyond its own needs and thus create the capacity to supply Austria and Germany. Croatia’s Prime Minister Andrej Plenkovic wants to seek co-financing from the EU and, according to Chancellor Karl Nehammer (VP), can also count on support from Austria.

Video: Energy Minister Leonore Gewessler said this before the discussion of the EU energy ministers

Against higher network charges

Upper Austria’s industry is railing against the planned increase in network charges for electricity and gas. If you have to cope with the price increases in the working price, it is incomprehensible that the use of the network should now become more expensive again, says the chairman of the industry division in the Upper Austrian Chamber of Commerce, Erich Frommwald.

Frommwald refers to the draft regulations of the regulatory authority E-Control, which provide for higher network fees for electricity and gas. The authority has the right to fix these prices.

Above all, the grid loss fee will become more expensive. This compensates for the losses in the line and measurement losses. Frommwald: “The state should compensate for this. An EU program allows this for a limited period of time.”

Source: Nachrichten

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