PRAGUE, Aug 29 (Reuters) – The Czech Republic will convene an emergency meeting of European Union energy ministers on Sept. 9 to find a bloc-wide agreement on tackling surging power costs, potentially through capping the price of gas used in electricity production.
Europe’s electricity costs have soared since Russia curbed gas supplies to Europe, sending prices of the fuel sharply higher, and there are fears Moscow could cut flows further in retaliation for Western sanctions over its invasion of Ukraine.
Power prices are scaling new records almost daily, with Germany’s benchmark contract breaching 1,000 euros per megawatt hour for the first time on Monday, leaving governments scrambling to protect households and businesses.
The Czech Republic, which holds the EU’s rotating presidency, has sought to build support for an EU-wide solution and said on Monday that could involve a cap on the price of gas used to generate electricity.
Czech Industry Minister Jozef Sikela said another option was market intervention by states or even, theoretically the European Central Bank, and that other instruments could be discussed.
“The main task… is to separate the price of electricity from the price of gas, and thus prevent Putin from dictating to Europe prices of electricity with his shenanigans with gas supplies,” Sikela told a news conference.
Concrete proposals will be drafted this week and discussed with the European Commission and member states to reach some agreement by the Sept. 9 meeting.
EU Commission President Ursula von der Leyen said in a Twitter post on Monday that skyrocketing electricity prices were “exposing the limitations of our current market design”.
“It was developed for different circumstances,” she said in the post. “That’s why we are now working on an emergency intervention and a structural reform of the electricity market.”
Over the weekend, Austrian Chancellor Karl Nehammer, whose government had earlier been sceptical of price caps, backed the idea of an EU-wide measure amid “madness” in energy markets. read more
Belgium has also backed introducing price caps for the EU’s gas and electricity hubs, according to a note seen by Reuters on Monday, as well as suspending trade in cases of “irrational market behaviour”. read more
The country, which Eurostat said earlier this year had the EU’s highest rate of energy inflation, has been pushing for a bloc-wide cap on energy prices since February, and may decide on a national cap at an extraordinary government meeting on Wednesday.
Belgium has called for a review of pricing that currently translates higher gas prices into more expensive electricity, even if the latter is produced from nuclear or renewable sources.
“Electricity is produced today at a price that is much lower than the price at which electricity and gas are sold,” Belgian energy minister Tinne van der Straten wrote on Twitter.
“There is no longer any link between the production cost and the selling price. We need to review this.”
Russian gas giant Gazprom (GAZP.MM) says it is a reliable supplier and has blamed recent cuts in gas flows on technical issues with its Nord Stream 1 pipeline.
European politicians have been sceptical of Russia’s assurances, and governments have sought measures from price caps to cash handouts to help ease the burden on their citizens.
German Chancellor Olaf Scholz said on Monday that taking on higher energy costs for households was a top priority for his government.