LONDON — The European Union is working on new measures to prevent extremely high gas prices after “excessive” levels seen this summer, in a move that could have major implications for European consumers.
The European Commission, the executive arm of the EU, proposed Tuesday setting a limit on daily gas trading levels. The aim is to avoid price spikes, which can lead to higher energy bills for households.
The front-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, reached historic levels in late August, when the price of natural gas jumped to 341 euros ($334) per megawatt hour, from around 45 euros a year earlier.
Prices have come down since then as EU nations have taken steps to improve their energy supply, but they remain relatively high on an historic basis and are a major problem for the European economy. European natural gas prices were trading around 120 euros per megawatt hour Tuesday.
“We are in a high price global reality,” a senior EU official, who did not want to be named due to the discussions still being underway, told reporters Tuesday. The same official added that the summer’s “excessive” prices “had a significant impact on the European economy and European consumers.”
The potential gas trading limits are, however, meant to be temporary.
A second EU official also told reporters that the commission wants to do “something meaningful, but not harmful” to the market.
Speaking earlier this month, European Commission President Ursula von der Leyen said: “We should consider a price limitation in relation to the TTF in a way that continues to secure the supply of gas to Europe and to all Member States and that would demonstrate that the EU is not ready to pay whatever price for gas,” according to Reuters.
The commission also proposed Tuesday the setting up of a new benchmark for trading liquified natural gas (LNG).
“The TTF is linked to pipeline gas prices, but it is not accurate as most countries use LNG,” the second official said, adding that the idea is not to replace the current benchmark for natural gas but rather creating a new one that only takes into account LNG.
The commission said this new benchmark should be in place next spring, when EU nations will be focused on bolstering their gas storage levels in time for the winter.
EU heads of state are gathering in Brussels Thursday to discuss the new proposals.
Critics have said the 27 member states are taking too long to address the energy crisis jointly. Supporters, however, argue that the EU has taken a number of meaningful steps since Russia’s invasion of Ukraine to boost its energy security.
The EU used to import about 40% of its natural gas from Russia; that number is now at around 7%.