The European Commission has just presented some proposals to accelerate the disconnection of Russian gas. Some proposals that also open the door to temporarily limit prices, but in specific cases or in situations of vulnerability, whether of households and companies. The Community Executive itself acknowledges that “in order to deal with the current emergency, it will study all possible options for emergency measures to limit the contagion effect of gas prices on electricity prices, such as temporary price limits. It will consult with urgently to all stakeholders and will propose options in the coming weeks”.
And what countries like Spain, Italy or Greece want is that these “next weeks” become 15 days, and that on March 24, when the European Council starts in Brussels, the European Commission already has those options defined for ” limit the contagion effect of gas prices on electricity prices”.
And what does it mean? Well, that the price of the most expensive energy, gas, be decoupled from the electricity bill. As the market is now designed, the price of the most expensive energy is what determines the final price. And what the southern countries are asking for is that this not happen, or at least that it stop happening at a time like the present, with runaway prices and a runaway energy crisis due to the war in Ukraine generated by the Russian invasion.
“We defend that it is a structural problem.” sources from the Spanish Government explain: “And they are beginning to listen to us. Until now, it was said that it was a temporary problem, that it should be financed with the fiscal capacity of each country and without touching the market. But six months later we see that there are risks in economic sectors, and many Member States are coming to our positions. We have been saying for a long time that, unless the link that is affecting the electricity sector is broken, there will be no solutions. And now we see that the tide is going in that direction “.
“For us this is very urgent,” state government sources, “we are discussing in detail, we spent two hours with the president of the European Commission last Saturday talking about these things, there have been other meetings and they are seeing that we have it very well studied”.
What Spain is working on together with other countries is that this Versailles summit comes out with a mandate that builds on the European Commission’s communication from last Tuesday that culminates in a proposal that decouples the price of gas from the electricity bill In two weeks.
The text of the draft conclusions reads: “We invite the Commission to present a plan to ensure security of supply and affordable energy prices during the upcoming winter season.” And what the southern countries want is to add, in that sentence, the time limit of the European Council of March 24 and 25.
“What cannot be accepted is that 20 percent of the production of that electricity, which is gas, is contaminating the entire price of electricity when we should have a cheaper electricity price,” he said. the President of the Government, Pedro Sánchez, upon his arrival in Versailles: “We must fix once and for all a dysfunction that is diminishing the well-being of citizens and is undermining the competitiveness of the Spanish and European industry and economy”.
Sánchez spoke of “a two-way game”, alluding to the current meeting in Versailles and the upcoming summit in Brussels.
The president also defended the promotion of the energy interconnections of the Iberian Peninsula with the rest of Europe. “It is unacceptable that the Iberian Peninsula is an energy island”, said Sánchez: “These interconnections have to be made. It is time for us to start them up”.