CNN
Europe has agreed to a cap on natural gas prices, following months of debate over whether the measure will protect European households and businesses from extreme price spikes as temperatures plummet.
In a Monday meeting, EU energy ministers agreed to trigger a cap on the price of month-ahead natural gas futures on the Dutch Title Transfer Facility (TTF) — the bloc’s benchmark gas exchange — to €180 ($191) per megawatt hour if it exceeds this level for more than three consecutive working days.
The cap will also apply to three-month and year-ahead gas trades, and it will remain active for at least 20 working days once triggered. It is planned to come into force as of February 15 of next year.
“We have the deal,” Jozef Síkela, deputy prime minister for the Czech Republic, said at a Monday press conference. The Czech Republic currently holds the presidency for the EU Council.
The price ceiling is much lower than the €275 ($292) per megawatt hour limit originally proposed by the European Commission last month.
The cap would also be triggered if prices hit at least €35 ($37) higher than a reference price for liquified natural gas (LNG) for the same period. Prices for LNG — a chilled, liquid form of gas that can be transported via sea tankers — are tightly linked to prices for Europe’s natural gas delivered by pipelines.
Síkela described the cap as a “temporary, effective [and] realistic mechanism which will protect citizens and businesses from the excessive gas prices we have seen this summer.”
“This is not a fixed cap, but rather a dynamic one,” he added.
The cap is the latest in a raft of measures agreed by the European Union this year to stem an energy crisis sparked by Russia’s invasion of Ukraine that has pushed up prices and fueled the highest inflation in decades.
Gas prices spiked to a record high of around €345 ($367) per megawatt hour in August, after Moscow reduced gas deliveries to the continent. TTF gas futures fell back 5% on Monday to hit €107 ($114) per megawatt hour.
Other EU measures have included gas storage requirements and a price cap of $60 a barrel on seaborne Russian oil.
