Headline: EU Urged to Set Lower Emergency Gas Price Cap as Italy Calls for Immediate Action
Subhead: With the current cap set to expire soon, Italian energy minister suggests a significantly reduced threshold to avoid further power bill shock.
Article:
European Union (EU) leaders are being pushed to lower the emergency cap on natural gas prices and extend it urgently, according to Italian Minister of Energy Transition and Security, Gilberto Pichetto Fratin. In an interview with Radio Radicale, Fratin emphasized the need for the EU to review and decrease the price threshold to avert another round of skyrocketing electricity bills. The current cap, introduced at the start of 2023, is set to expire at the end of January 2025.
The gas price hiring mechanism, also known as the ‘market correction mechanism,’ was implemented in late 2022 as a protective measure against soaring gas and electricity prices. Triggered when the day-ahead price on the Dutch TTF hub exceeds $1850 per MWh for three consecutive working days, and the spread between TTF and global LNG prices is above $36 per MWh, the mechanism aims to safeguard industries and households from excessive cost fluctuations.
With the current gas price hovering around $500 per MWh and Russian pipeline supplies still at a standstill, Fratin argues that the cap should be adjusted downwards to between $510-$620 per MWh. He draws attention to the existing strain on the EU’s economy and industry, which is already struggling with gas prices above $450 per MWh.
As the EU braces for another potential energy crisis, leaders are urged to heed Fratin’s warnings and reassess the gas price cap policy, ensuring it remains an effective tool in defending European consumers and businesses against volatile energy markets.
