In a letter sent to the European Commission on Tuesday 11 February, 11 market players, including energy companies and banks, called for a rejection of the idea of a price cap mechanism. The latter has been mooted as a way of tackling high energy prices in Europe in the face of American and Chinese competitors (see EUROPE 13561/9), but the letter states that “it would undermine the objectives of the Clean Industrial Deal, and the progress made since the energy crisis”.
They are calling for the forthcoming Action Plan on Affordable Energy Prices – due to be presented at the same time as the Clean Industry Deal on 26 February – to “not undermine the successful establishment of the integrated EU energy market”.
“Direct government interventions into functioning markets (particularly on a wholesale level), including into market-based price formation, may have unintended long-term consequences and should be avoided”, wrote the signatories.
In a similar vein, the association of European electricity producers, Eurelectric, has pointed out that inframarginal prices caps will not incentivise consumers to enter into long-term hedging contracts. “(...) invoking a semi-permanent state of crisis with frequent interventions in the market (...) will deter investors (...) at a time when their capital is crucially needed”, writes the association.
To see the letter from the 11 players: https://aeur.eu/f/fgy
To see Eurelectric’s position paper: https://aeur.eu/f/fgx (Original version in French by Pauline Denys)