EU Plans Emergency Intervention to Stem Surging Power Prices
August 29th, 2022Via: Bloomberg:
The unprecedented spike in power prices, which have soared almost 10-fold in the past year, has fueled inflation and dramatically increased the economic burden on businesses and households recovering from the pandemic.
More and more member states are calling for a price cap and the Czech Republic, which holds the rotating presidency of the EU, has convened an extraordinary meeting of energy ministers on Sept. 9.
The exact makeup of an EU intervention plan is still being developed, and EU diplomats said the commission could offer a detailed plan as soon as this week.
A draft internal EU document seen by Bloomberg News earlier this year showed the commission considered an option of capping gas prices to avoid “unbearably high” costs if Russia significantly limits or cuts off the flow. Introducing a maximum regulated price in an emergency would be limited to its duration and the market price should be used as long as possible.
One possibility would be to limit price formation during the disruption scenario by capping the price on European gas exchanges, but the document showed such a price cap can in general be introduced in different ways and can intervene at different levels of the gas value chain.
With Russia squeezing gas deliveries and power-plant outages further sapping supply, pressure is growing on EU leaders to act quickly or risk social unrest and political upheaval.
