The European Union is closer to potentially intervening on the bloc's electricity market as energy prices soar ahead of what would be a difficult winter for EU consumers and businesses.
The European Commission is working on an emergency intervention, Commission President Ursula von der Leyen said this week.
"The skyrocketing electricity prices are now exposing, for different reasons, the limitations of our current electricity market design. It was developed under completely different circumstances and for completely different purposes. It is no longer fit for purpose," von der Leyen said in a speech on Monday.
"That is why we, the Commission, are now working on an emergency intervention and a structural reform of the electricity market. We need a new market model for electricity that really functions and brings us back into balance," the EC president added.
For months, several EU member states have been proposing price caps on natural gas, but others have been reluctant to back such an intervention on the energy markets.
Belgium's energy minister, Tinne Van der Straeten, said this weekend that gas prices in Europe needed to be frozen urgently, and that the link between gas and electricity prices needed to be reformed to prevent future crises.
Germany, Europe's biggest economy where year-ahead power prices have hit stratospheric levels in recent days, is pushing for a reform of the energy market, but it is also reportedly open to a price cap on gas, Italian business daily Il Sole 24 Ore reported on Tuesday.
More EU member states that have previously opposed a market intervention could now back reforms or proposals for decoupling electricity prices from the price of gas, as well as a price cap on gas, as skyrocketing power prices fuel inflation and hurt businesses across Europe.
Benchmark power prices in Europe are breaking records, as natural gas supply from Russia continues to be limited ahead of the winter. The EU energy ministers are set to hold an emergency meeting to discuss the crisis on September 9 in Prague.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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Comments
I can see decoupling electricity prices from gas, but a price cap on natural gas? Do they think they can force producers to supply them with gas when they can sell it elsewhere for more?
And to think, it was less than a year ago that they told producers that they didn't want their filthy gas. And yet they still think that they can dictate terms.