For its part, Russia threatens to suspend supplies of oil and petroleum products to states that decide to impose a ceiling on its price.
In a first step for the containment of energy prices will advance today the most developed industrialized countries, as they meet the finance ministers of the G7in order to discuss the US government’s proposal for imposing a ceiling on the price of Russian oil.
Mi a week later, on On September 9, the EU energy ministers will hold an extraordinary meeting., where they will also put on the table the ceiling on the price of natural gas, but also the decoupling of the price of electricity from that of gas, while on September 14, Ursula von der Leyen will announce the Commission’s proposals for imposing a ceiling on the price of natural gasin a first attempt by Europe to contain energy prices in view of the difficult winter ahead for households and businesses.
The ceiling on the price of gas means that the EU will collectively decide on a maximum price, above which it will refuse to buy the Russian energy product.
As reported by moneyreview, the The Commission is examining the two models of the South that are already successfully implemented, the Greek and the Iberian, plus a Greek proposal submitted in July to the Council of Energy Ministers by Kostas Skrekas, in order to formulate its proposals for a common European response to the energy crisis. For the first time during the long and deep energy crisis, the E.U. it appears open to consider all available options for price de-escalation, lifting the protection of the electricity market’s marginal pricing model that it has generously provided throughout the past, supporting the countries of the North against the demands of the South for structural changes.
The Greek model
According to a Commission document cited by Reuters, the E.U. as a measure of direct intervention, it examines the Greek model, which it foresees ceiling per power generation technology at which generators are reimbursed, while the difference from the marginal price determined each time by the expensive natural gas is collected by the state and directed through the Energy Transition Fund (TEM) to subsidies for electricity bills, notes a Kathimerini report.
“An intervention would introduce a price cap for electricity generation technologies that have lower operating costs (incl. lignite, RES, etc.) than gas-fired power plants“, the document states. The aim of the intervention is to separate the commercial returns of said power generation from the current price of electricity, which has soared as a result of soaring natural gas prices. Capping the price of certain technologies could generate financial resources for states, which would then be leveraged by governments by introducing measures to cap retail energy prices for consumers.
The memo, according to Reuters, “presents a first set of measures to optimize the operation of European electricity markets and reduce the impact of gas prices on the prices consumers pay”.
It is noted that the Greek Minister of Energy and Environment, Kostas Skrekas, has already sent letters to its 26 counterparts, in which they describe the Greek proposal for a mechanism to recover excess revenues from power companies, which has been implemented in Greece for two months with significant results. “For August, we have recovered almost 900 million euros from the power generation companies and have led them to the energy transition fund to subsidize the bills of the Greeks,” he said characteristically.
The Iberian model
At the center of the discussions is the Iberian model, which foresees the imposing a ceiling on the price of natural gas used for power generation. The difference with the import price is covered by a special levy imposed on consumers. The cost of compensating the difference between the ceiling and the import price worries both the E.U. as well as many member states. Both models, however, can be implemented immediately and produce results within a month, which is why they are being eagerly considered by the Commission.
Russia: We will stop supplying oil to countries that will impose a cap
Meanwhile, Russia threatens to cut off oil supplies and petroleum products in the states that will decide to impose a ceiling on its price, through the deputy prime minister, Alexander Novak.
“Regarding the price caps, if they impose restrictions, we will simply stop supplying oil and oil products to the companies and states that will take these measures because we are not going to operate non-competitively,” he said.
He even described as “absolutely absurd” the proposals to impose restrictions on the price of Russian oil, adding that the measure in question could completely destroy the global oil market.
“Interfering with market mechanisms in such an important industry as oil, which is indeed the most important in terms of the energy security of the entire planet, and these kinds of efforts will only lead to destabilization,” he added, noting that European and American consumers who already pay more for energy will be the ones who will be harmed by this measure.
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