EU countries reach deal on gas price cap

EU energy ministers have agreed to cap the price of natural gas to shield consumers from rising energy prices.

Following intense negotiations, energy ministers reached a deal on Monday that will help introduce this market correction mechanism.

Under the mechanism, prices will be capped at €180 per megawatt hour if the level is exceeded for three days in a row. Several safeguards for suspension and deactivation are included so as not to disrupt the gas market.  

Energy Minister Miriam Dalli insisted before the Energy Council meeting on Monday that reaching an agreement will be important to calm markets and stabilize gas prices.

She added that this agreement is necessary for Malta as it relies on gas for energy production. It will also result in manageable energy prices on the European continent, which is where Malta imports its electricity through the interconnector.

“I believe that this regulation is one step in the right direction and, together with other decisions, has the potential to control energy prices to some extent,” she added.

European countries have been experiencing exorbitant energy prices, which have spiked even further as member states try to wean themselves off Russian gas following the war in Ukraine.

Before the invasion, Russia supplied 40% of the gas used across the European bloc.

 “In Malta, we have taken the bold decision to retain energy prices stable for families and entrepreneurs, considering that the vast majority of our industries are SMEs. This means that the government has to work harder at the European level to ensure that gas prices do not increase uncontrollably,” Dalli added.

Energy Ministers also reached an agreement on two other emergency regulations, one relating to permitting for renewables and another one ensuring solidarity in cases of crisis.

EU ministers have been negotiating the gas price cap deal for months, as governments were divided on how it should be limited.

While some countries like France and Spain wanted to implement the cap urgently, other countries like Austria, Germany and Denmark were worried that the cap would scare off gas suppliers, who would move to the Middle East.