A complicated and contested mechanism to cap the wholesale price of gas imported to the European Union in case of future price spikes applies from Wednesday.
The gas price cap was adopted by EU energy ministers in December after months-long controversies over how to deal with soaring gas prices after Russia strongly reduced its imports to the bloc.
After the bloc's reference wholesale gas price peaked at close to €350 ($376) per megawatt hour in August, it is currently around €50 to €60, a similar level to shortly before Russia's invasion of Ukraine.
The new price mechanism is to kick in automatically if prices for month-ahead futures, traded at the Dutch reference trading hub Title Transfer Facility (TTF), exceed €180 per megawatt hour for three consecutive working days, while the TTF price is at least €35 higher than global prices for liquefied natural gas (LNG).
The new regulated price is capped at €35 above the global LNG price, meaning that gas can be traded above €180 per megawatt hour in the EU if global LNG prices are high.
Whether the cap will be triggered during its one-year duration is unclear and depends for example on how easily and at what costs EU countries can re-fill their gas storage facilities ahead of the next winter.
Germany was among the countries that were particularly sceptical of a gas price measure, citing concerns over the security of supply, while other capitals had called repeatedly for an EU-wide solution.
