The European Union on Tuesday provided information on a long-debated natural gas price cap of 275 euros/MWh (~$282) — well above the current limit of ~120 euros/MWh — as part of an effort to protect consumers from the impact of higher energy costs associated with Russia invasion of Ukraine.
The cap would be available for one year from January 1 and would only be activated if the forward price of the Dutch title transport exceeds 275 euros and if the difference between the cap and the price of liquefied natural gas exceeds 58 euros for 10 consecutive trading days – but criticizes. saying the device is too weak to ever be used.
“The function is carefully designed to be efficient, but not jeopardize our security of supply, the functioning of EU energy markets and financial stability,” said Kadri Simson, the EU’s energy chief.
Meanwhile, the European Energy Exchange warned that the proposed price cap would not reduce the cost of gas and could risk “serious and potentially irreversible” damage to the EU’s energy security and financial stability as a result.
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Gasoline prices in Europe have fallen sharply from summer peaks due to unseasonably warm autumn weather, easing concerns about possible rationing and rising energy bills this winter, but Russian gas giant Gazprom has threatened to cut supplies further by restricting gas flows through Ukraine.