Six months ago, and just a few weeks after Russia invaded Ukraine, there was much talk at EU level about capping electricity and gas prices.
For various reasons – most notably resistance to market pricing interventions and fear of climate change mitigation – there has been a great deal of reluctance to do so.
Spain and Portugal went ahead and got the green light from Brussels to cap gas prices paid by consumers, leaving taxpayers to absorb the difference for energy companies.
Others, such as Germany and Austria, have stubbornly refrained from taking such action. But now there are signs of a major rethink in both Berlin and Vienna.
European Commission President Ursula von der Leyen was preparing to raise the issue in two weeks’ time on September 14 in her State of the Union address to the European Parliament in Strasbourg.
But a huge rise in gas prices by about a third last week made them see the need for far greater urgency.
EU energy market experts are already working on the case and the current holder of the rotating presidency, the Czech Republic, has called a special meeting of the bloc’s 27 energy ministers for Friday 9 September in Brussels. Environment Secretary Eamon Ryan – who has hitherto balked at energy price caps for that country, claiming they are unlikely to help consumers – will attend.
Brussels officials last night said proposals would see electricity prices decoupled from gas prices. This price maintenance has long been common, as gas provides a quick reserve for power generation during periods of peak demand. Now the electricity is to be coupled to cheaper renewable sources.
There is also vague reference to “more general energy market reforms” that could cover a wide range. There must also be strategies for “quickly built” power generators, much larger energy conservation efforts and the dreaded rationing.
The jury in Dublin is unanimous on whether concerted EU action can make improvements in a mess largely caused by Russia choking off supplies to the rest of Europe in retaliation for sanctions on Ukraine. But while Ireland gets gas from the Corrib field and Norway gets gas from Scotland, it’s clear that any improvement in EU energy market stability would help that country.
German and Austrian gas companies have now fallen into crisis. Uniper, one of Germany’s largest utilities, has increased its credit line from a German state bank from €9 billion to €13 billion just to continue operations. Austria’s largest gas and electricity supplier, Vienna, which supplies a third of the country’s gas, is in financing talks with the local government.
Uniper has long been Europe’s biggest buyer of Russian gas, and its officials said volumes shipped from Russia have fallen 80 percent since June. It has been buying alternative supplies at significantly higher prices, resulting in cash losses of “well over €100m a day”.
Austria’s Chancellor Karl Nehammer said he would propose an EU-wide cap on electricity prices at a meeting of energy ministers.
Robert Habeck, Germany’s economy minister, said German gas supplies are at about 83 percent and will meet the 85 percent target set for October by early next month.
On Monday, Ben van Beurden, the head of one of the world’s largest energy companies, Shell, said it was not just about the coming winter and that energy rationing was a real prospect.
https://www.independent.ie/opinion/analysis/as-german-and-austrian-gas-companies-face-crisis-eu-begins-to-change-its-stance-on-caps-41948868.html In view of the crisis in German and Austrian gas companies, the EU is beginning to change its position on caps