Belgium, (Brussels Morning Newspaper) EU energy ministers are to discuss plans to rein in rising energy prices later this week, according to a document drafted by the Czech Republic.
Ministers will discuss proposals including emergency loans for the energy market and price caps, Reuters reported on Sunday.
They are to consider temporary exclusion of gas-fired power plants from the bloc’s system for setting electricity prices, price caps on imported natural gas and gas used as fuel in power plants.
In addition, EU ministers will discuss emergency “pan-European credit line support” for energy market companies that face high margin calls.
EU member states have different plans for reining in soaring prices, with Finland and Sweden announcing loan programmes for energy companies worth billions of euro with the aim of preventing rising collateral requirements from forcing companies off the market.
“The margin requirements for futures contracts have increased commensurately with increased daily price fluctuations,” the draft document notes and adds “this makes it almost impossible for an increasing number of companies to keep their hedging positions open, triggering their withdrawal from the futures markets.”
Power utilities sell electricity years in advance and are facing soaring gas prices, which is putting strain on their solvency.
Nord Stream on hold
The EU market is expecting further growth of prices after Russian energy company Gazprom announced Nord Stream 1 gas pipeline would remain closed until a leak was fixed.
Natural gas prices in the EU have increased nearly 400% in the last year or so, partly due to lower flow through Nord Stream 1, with Gazprom blaming technical problems for disruptions.
Klaus Müller, head of the German Federal Network Agency, pointed out that closure of the pipeline shows the importance of planned liquefied natural gas (LNG) terminals that should come online this winter.
The European Commission commented on Gazprom’s move, noting in a statement “Gazprom’s announcement this afternoon that it is once against shutting down Nord Stream 1 under fallacious pretences is another confirmation of its unreliability as a supplier.”
Jacob Mandel, an associate at Aurora energy consultancy, pointed out “when weather turns cold and demand starts to pick up in the winter in Europe and Asia, there’s only so much LNG out there that Europe can import to replace Russian gas.”