New proposal from Brussels: intervene in the electricity market without decoupling gas prices

Two days before the meeting, the European Commission’s proposals continue to clash with what most governments defend The European Commission is open to abandoning the reference TTF index for gas prices in the wholesale market and limiting the gas import priceVon der Leyen wants 15% of gas imports to be made through joint purchasesThe European summit this Thursday and Friday will have to roll up their sleeves to carry out, once and for all, an agreement that serves to reduce electricity bills and heating. But two days later, the proposals of the European Commission continue to collide with what most governments defend. The European Executive published this Tuesday its list of proposals. Von der Leyen continues to refuse to decouple gas prices from electricity price formation, the Gordian knot that triggers bills. The Commission proposes to act with temporary emergency measures and long-term reforms. His idea is that in order to reduce gas prices, we must start by creating a new index that defines the price of gas. The current one, the Dutch TTF, was made for gas arriving by pipeline. More than a third already arrives in methane tankers and prices have plummeted since June but the TTF does not reflect it. The European Commission is proposing a new index, which it hopes will reduce speculation and focus on liquefied gas arriving by ship. Until this index is created and working, Brussels proposes a temporary mechanism (until next spring) that limits the price of imported gas but leaves a margin, within a band, so that it is always slightly higher than the price of gas in the markets Asians. In this way, it tries to ensure that supplies are not diverted to Asia. An analogous mechanism should limit the volatility and speculation in the daily price formation in the derivatives markets. Everything would be temporary, it would only be activated in the event that gas prices shoot up again and it would need the approval of the governments. The European Commission suggests governments put more bandages without closing the wound. For example, by redirecting 40,000 million euros of the cohesion funds, not spent until now and which normally had to go back to the governments, in measures to alleviate the bills. The amount is a very small part of what would be necessary. Brussels also proposes joint purchases from next year so that in spring and summer it is cheaper to fill the reserves. His proposal wants 15% of national reserves to be made through joint purchases. In this way, it tries to prevent supplier countries from playing divide and conquer with European governments (Algeria with Italy and Spain, for example) and from using joint purchasing power as a weapon to negotiate better prices. The European Executive believes that regulations can be approved that automatically force solidarity between Member States in the event of insufficient supplies, for example “extending the obligation of solidarity to Member States without direct gas pipeline connections so that regasification plants also participate.” The Commission does not go further The ambassadors have been studying the documents since Tuesday night and the summit should give a political signal so that at another meeting of energy ministers, on the 25th, the package is definitively approved. Will it be enough for governments, which have been asking since last spring to intervene in the European energy market? The European Council services think not. Under the orders of Charles Michel, the Europeanization of the ‘Iberian exception’ appears as an alternative proposal in the draft conclusions of the summit. France and Italy promote it. Germany no. Brussels is not wet. The Belgian, Greek, Italian and Polish governments presented weeks ago a proposal to limit the price at which gas is imported. The Commission turns a deaf ear but this Tuesday it was still in the draft conclusions. It is about setting a maximum price, variable within a range, at which Europe would buy gas. Not only the Russian, that of any supplier.