This image taken on March 8, 2022 shows a model of a natural gas pipeline in front of the colors of the EU and Russian flags displayed. REUTERS/Dado Ruvic/Illustration
BRUSSELS: European Union energy ministers will discuss options to curb energy price spikes, including gas price caps and emergency credit lines for energy market participants, documents seen by Reuters show. .
After Russia curbs gas supplies to the bloc, EU ministers will meet on Sept. 9 for an urgent bloc-wide response to skyrocketing gas and electricity prices that are hitting European industry and pushing up household costs. Discuss measures for
According to a draft document seen by Reuters, ministers have decided to temporarily remove gas power plants from the current EU system of setting price caps on imported gas, gas used to generate electricity, or electricity prices. It said it would consider options to include.
Ministers also said they would consider providing emergency “pan-European credit line support” to energy market participants facing very high margin calls by the Czech Republic, which holds the rotating presidency of the EU. The drafted document said.
Finland and Sweden on Sunday announced plans to provide billions of dollars in liquidity guarantees to utilities to prevent ballooning collateral requirements from overthrowing the companies.
“Margin requirements for futures contracts have increased in proportion to the increase in daily price volatility. provokes a withdrawal,” the EU document said.
To guarantee a certain price, an arrangement that requires utilities to deposit a “minimum margin” into an account as a safety net in case the electricity defaults before it is produced and actually enters the utility. to sell most of the electricity a few years ago. market.
If the funds in the account fall below the minimum margin requirements for trading, a margin call will occur and the company will have to secure it with more cash. , squeezing the liquidity of market participants.
European gas and power buyers brace for further price pain as markets open on Monday after Russia said one of its main gas pipelines to Europe would remain closed indefinitely.
European gas prices have risen nearly 400% over the past year due to reduced gas flows from Russia around the time of the February invasion of Ukraine. Moscow attributes the disruption to technical problems.
An EU emergency policy would need to be proposed by the European Commission, which is currently drafting.
The document reflects proposals contained in last week’s draft Commission memo to reduce EU-wide electricity consumption and cap electricity prices for generators that do not run on gas.
The EU energy ministers will also discuss possible caps on margin limits that energy exchanges can ask for, and a temporary suspension of the European power derivatives market could change ahead of the meeting. I have shown a document that has
