Dear gas, floating price caps and collective purchases in the EU

Mobile and temporary roof at gas prices and collective purchases. These are some of the measures, in addition of course to energy saving, that the European Commission should present this afternoon, according to the draft of the communication, published by Euractiv. We want to adopt, first of all, legislative instruments to purchase gas jointly: we have been talking about it since last March, but so far collective purchases have not taken off, as Emmanuel Macron explained, because the companies had the priority to replenish stocks at all costs, which led to a rise in prices, because European buyers fought each other with bids. To prevent this from happening again next spring, when stocks will be replenished in view of the winter 2023-24, which is expected to be more difficult than the incoming one, the Commission proposes to aggregate demand at EU level, to provide for mandatory participation the EU mechanism for aggregation of demand to the extent of at least 15% of the capacity of the deposits and a voluntary purchase system that allows companies to form a European purchasing consortium. While the anti Covid vaccines were purchased by the States, with contracts negotiated by the Commission, here the players are private: we therefore move to a ‘cartelisation’ of purchases, to increase the EU negotiating power, given that internal competition proves to be counterproductive, in Given the importance of gas transport, transformation and storage infrastructures, the proposal includes rules on the transparency of the spare capacity of terminals and pipelines, “in the event of short-term congestion”. To be better prepared for winter , measures are proposed to allow member states to exceptionally reduce non-essential consumption, such as heating open spaces, to ensure that gas is not lacking for essential services and industries. Member States “can redefine who are protected gas consumers”, provided that “vulnerable” families are protected “under any circumstances”. only “6 bilateral agreements” out of the “40 possible”), the Commission proposes “basic” solidarity rules, which ensure that a state in difficulty receives gas from the others, in exchange for “fair” compensation. on prices, the Commission “is developing” a “complementary” benchmark for liquefied natural gas: Acer, the regulatory agency, should gather the necessary information “by the end of the year”; the index should be available in time for the next stock replenishment season. In the meantime, the Commission proposes to introduce a “mechanism to limit prices on the TTF”, to be activated in case of need. The mechanism will create a “dynamic price limit” on the FTF for transactions, avoiding “extreme” volatility and excessive rises, as well as “speculation”, which “could cause difficulties in the supply of natural gas to some Member States”. To limit intraday volatility, a mechanism should also be introduced to put a cap on daily upside on the highly volatile derivative markets. The Commission will then “develop with Member States ways to limit the impact of high gas prices over electricity “. This is the extension of the so-called ‘Iberian exception’, a cap on the price of gas used for electricity production. The idea does not convince everyone (Italy is against it, because it would weigh on public finances) and the Commission warns that the proposal involves “some risks” if extended to the whole of the EU and that the Member States are “different” from each other. We need to design a “solution” that “works for everyone” and is “in line” with the objective of “not increasing gas consumption” and “managing gas flows beyond European borders”. In today’s package, there is no reference to a common financing of the measures needed to combat expensive energy. The EU executive merely points out that it is “crucial that shared solutions be pursued at the EU level, in order to avoid national solutions, depending on the different fiscal space in the various Member States”. It is not explained how this can be achieved without a common funding mechanism.