On Monday 14 November, the Czech Presidency of the Council of the European Union submitted a draft political agreement to Member States on the proposal for a Council Regulation to introduce emergency measures to reduce gas prices.
While this third draft compromise is quite similar to the previous version (see EUROPE 13061/16), some changes and remarks should nonetheless be noted.
A legislative proposal on price capping before 24 November?
The Czech paper maintains the part of the European Commission’s text relating to the creation of a ‘market correction mechanism’ whereby the Commission could propose to establish a maximum dynamic price for natural gas transactions on the spot market (see EUROPE 13045/1).
Since the details of this mechanism are to be specified in a later proposal, Prague is emphasising that “the majority of Member States asked the Commission to propose legislation on the gas price cap (price correction mechanism)” before the next meeting of energy ministers, which is scheduled for 24 November.
“Having a legal text in time before the Council on 24 November would significantly help facilitate discussions and agreement on this Council Regulation”, the document also states.
The Commission, for its part, is remaining vague on the timetable. It simply announced that it will present an outline of the mechanism shortly (later this week, according to the Commissioner for Energy - see EUROPE 13062/12), which will then be followed by a legislative proposal.
Clarification of solidarity mechanisms
However, the draft compromise introduces a number of changes relating to the establishment of solidarity mechanisms between Member States relating to gas supply where no bilateral agreements exist.
According to the text, the compensation to be provided to the Member State standing in solidarity should not only include the price of gas in that Member State and the costs of storage and transport, but also other indirect costs that are not covered by the price of gas. These costs would nevertheless be limited to 20% of the gas price.
The Czech paper also clarifies that in the event that the solidarity mechanism is extended to include countries that produce liquefied natural gas (LNG), Member States will have to exhaust all market-based measures before applying for solidarity.
With regard to the chapter on demand aggregation and the joint purchasing of gas, the Presidency has modified the tasks of the service provider in order to ensure that gas volumes are proportionally distributed between small and large companies who are taking part in aggregated demand. “Where the aggregated demand exceeds the received supply offers, the allocation of access rights shall be proportionate to the demand declared by the participating undertakings during the demand aggregation stage for a given delivery time and location”, the document adds.
See the draft compromise: https://aeur.eu/f/42h (Original version in French by Damien Genicot)