European proposal to double electricity prices from gas prices.

Here are the choices thought-about by the European Commission and despatched by official mail to varied states

What has been written and proposed is essential for the way forward for European power coverage in addition to the way forward for inflation. Indeed, these measures, though non-monetary, may considerably cut back inflation within the euro space.

I’ll go away you to the preliminary chatter about the reason for the present energetic mess.

At the Big Commission, we’re starting to notice that European residents can not pay 10 or 15,000 euros per 12 months for warm payments with out it leading to a revolt that can make the vested motion appear to be cat piss. Not everyone seems to be a yellow vest. Everyone will get scorching and desires power.

Alternatives are thought-about

a) Decoupling/limiting the impression of gas prices on electricity prices

– Temporarily limiting the worth of gas used for energy era;

– Temporarily capping the worth of gas imported from sure jurisdictions;

– Temporarily exclude gas-to-electricity era from the advantage order and pricing within the electricity market.

b) Increase in market liquidity

– speedy assist by way of credit score strains for market individuals going through very excessive margin calls, together with within the case of a particular decision at European stage, for instance by way of the position of the ECB;

– Changing buying and selling guidelines on power exchanges, for instance by quickly altering regulatory necessities for ensures in electricity buying and selling. Regulatory necessities for electricity buying and selling ensures together with computerized value cap adjustment amendments. computerized value cap adjustment;

– Temporarily suspending electricity derivatives markets in Europe; Or topic futures buying and selling in specified ranges.

c) Integrated energy demand discount measures

– Demand discount measures within the electricity sector, for instance, related to the built-in demand discount measures within the gas sector adopted in July 2022. Demand discount measures within the gas sector, as adopted in July 2022.

d) Limitation of income of marginal energy producers

– Temporarily restrict the worth of electricity earned by infrastructure-edge producers.

e) Impact of the EU Emissions Trading System

– Assess the probabilities of utilizing the EU Emissions Trading Scheme to sort out the present excessive electricity prices and make sure that the Council shortly takes the mandatory measures. Ensure that the Council strikes swiftly in the direction of an settlement on REPowerEU (Recovery and Resilience Plans (RRFs) restoration chapters) with the potential of utilizing market stabilization fund quotas.

– Security of electricity and gas provide must be protected at European stage;

– The inner power market and the advantages flowing from it have to be preserved;

– The measures shall not lead to a rise in gas consumption or jeopardize efforts to cut back gas consumption in Europe

– Measures must be easy and coordinated to implement at EU stage;

– Measures will mitigate the impression on prospects’ power payments;

– Alignment with the aims and implementation of the European Green Deal. The above emergency measures choices are designed as an instantaneous response to the present extraordinary state of affairs. However, we should always proceed to talk about a scientific improve of the interior power market design, in order that it’s simpler to function and higher ready for related market circumstances sooner or later.

Such an improve must be correctly studied primarily based on in-depth evaluation and impression evaluation, and the gradual implementation of the longer term decarbonized power market must be thought-about.

Issues: 1. Do you agree that the Commission wants to suggest EU-wide measures in time for the subsequent summer season season? If so, which of the described choices or different choices must be adopted?

2. What sort of particular system would you think about appropriate for fast resolution to the above talked about downside?

Charles Sannat

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