Economy 2 hours ago (Sep 06, 2022 07: 16AM ET)
© Reuters. Czech Minister of Industry and Trade Jozef Sikela gives a news conference during an extraordinary meeting of European Union energy ministers in Brussels, Belgium July 26, 2022. REUTERS/Johanna Geron
PRAGUE (Reuters) – There are two proposals in the European Union on how to set maximum prices on energy that the bloc’s energy ministers will discuss on Friday, Czech Industry Minister Jozef Sikela said on Tuesday, according to CTK news agency.
Sikela said the Czechs, who hold the rotating EU presidency, were collecting member states’ views on the proposals, which include either separating the high market price of gas from the prices of power plants generating electricity from gas; or setting a cap on prices charged by producers from lower-cost plants such as those using renewable sources, nuclear fuel and coal.
EU countries are scrambling to tame record-high power prices that have shot up as Russia halted most gas flows to Europe in response to sanctions and to European support for Ukraine’s defence against Russia’s Feb. 24 invasion.
A draft EU document, drafted by the Czech presidency and seen by Reuters on Sunday, said the ministers will consider options including a price cap on imported gas, a price cap on gas used to produce electricity, or temporarily removing gas power plants from the current EU system of setting electricity prices.
It also proposed to provide liquidity for energy market participants.
An earlier document on the European Commission’s upcoming proposals said they should include a price gap for power generators that do not run on gas. They would also include an EU-wide reduction of consumption, and using revenue above the price caps to help consumers pay their bills.
The reason for soaring electricity prices is that the market price is set by the most expensive power plants running to meet demand, which at the moment are plants using expensive gas.
Sikela said separating gas prices from those of electricity could lead to higher gas consumption, which was not a problem of the second plan.
Sikela said there was an agreement on providing credit to traders to raise market liquidity. He said the presidency planned to release a summary of member states’ positions on Wednesday.
He said the Czech government was working on a national solution alongside the European one.