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EU gas price cap applies from Wednesday: importance for the economy and consumers

2023-02-15T12:23:06.557Z


The European price cap for gas will apply from Wednesday. However, the cap only applies under certain conditions and is the result of months of wrangling between EU energy ministers.


The European price cap for gas will apply from Wednesday.

However, the cap only applies under certain conditions and is the result of months of wrangling between EU energy ministers.

Brussels – A price cap for wholesale gas purchases will apply in the European Union from Wednesday (February 15).

This is intended to combat the horrendous energy prices.

The upper limit only applies under strict conditions - namely when the price on the European gas exchange TTF in the Netherlands is over 180 euros for three working days.

In addition, the gas price must be at least 35 euros higher than the price for liquid gas (LNG) on the world market over these three days.

Italy and France have been demanding EU gas price caps for months

That's a long way off the highs seen last August, which sparked a debate about a price cap.

At that time, according to the EU Commission, European natural gas prices reached a level that was 1000 percent higher than the average prices recorded in the Union to date.

The energy ministers of the EU countries agreed on this in December.

For months, many countries such as France and Italy had called for a gas price cap.

Germany only agreed when the so-called market correction mechanism was linked to security conditions.

For example, it is suspended if deliveries have fallen sharply.

EU gas price cap to give economy more security

The flexible price cap is intended to prevent wholesale gas prices in the EU from being significantly higher than world market prices for long periods of time.

In addition, the EU can in future ban certain gas trading transactions if their price reaches a predetermined level and the price increase does not correspond to a similar price increase at regional level or on the world market.

The EU regulation on the so-called correction mechanism came into force on February 1st.

However, activation has only been possible since this Wednesday.

Difference between EU gas price cap and German gas price brake

The gas price cap in February will have no effect on end consumers.

On the other hand, the German gas price brake that will start in March will directly affect end consumers and is intended to cushion the consequences of the rapidly rising energy prices.

Households and small and medium-sized companies are guaranteed a gross gas price of 12 cents per kilowatt hour for 80 percent of their previous consumption.

For the remaining 20 percent, the normal contract price should apply – so an incentive to save should be retained.

(afp/dpa/rowa)

List of rubrics: © Mohssen Assanimoghaddam/dpa

Source: merkur

All news articles on 2023-02-15

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