Sources say that EU plans to allow gas price cap to expire

EU diplomats have said that the European Union will let its gas cap expire at the scheduled time of the month. This is a sign that the worst of Europe’s energy crisis, which began in 2022, has passed.

After months of high energy costs caused by Russia's slashing of gas supplies after its invasion of Ukraine, Brussels introduced the first price limit in December of 2022.

The measure that was supposed to kick in if the price reached 180 euros per megawatt-hour (eur/MWh), has never been implemented. On Monday, the benchmark front-month contract for gas at the Dutch TTF Hub was trading around 49 euros per megawatt hour (eur/MWh).

Gas prices are up compared to last week but still far below the peak seen in Europe's energy crises in August 2022, when they reached over 300 euros/MWh.

Two EU diplomats said that the European Commission informed its member countries of their intention to let the price ceiling expire at month's end.

On Monday, a spokesperson for the Commission declined to confirm whether or not the EU would extend the price cap. The price cap is an emergency regulation which the EU can adopt only in response to a crisis economic.

Last week, a spokesperson for the Commission told reporters that "the whole package we proposed in 2022 was done in a particular context and... suggested for a limited time".

Gas prices have risen in recent weeks due to cold weather, the ending of Russian gas flowing through Ukraine, and a rise in gas prices. Analysts say that Europe does not face energy shortages in general.

Italy had asked Brussels to lower the ceiling and renew it at 60 euros. The spokesperson said that the European Commission was drafting new policies to combat high energy costs.

(source: Reuters)