EU Gas Price Cap Possible... Commission President to Soon Unveil Power Market Structure Reform Plan

Ursula von der Leyen, President of the European Commission
[Photo by EPA Yonhap News]

[Asia Economy Reporter Park Byung-hee] Ursula von der Leyen, President of the European Commission, announced on the 29th (local time) that the EU will soon present a reform plan for the European electricity market. This is a measure to address the sharp rise in European electricity prices caused by Russia's reduction in gas supply at the Commission level.

According to Bloomberg News, after attending the Bled Strategic Forum held in Slovenia on the same day, von der Leyen visited Berlin, Germany, and said, "The soaring European electricity prices reveal the limitations of the European electricity market," adding, "We need to establish a means by which electricity prices are no longer dominated by gas prices."

Due to Russia's reduction in gas supply, European electricity prices have increased tenfold over the past year. President von der Leyen said the Commission will soon present measures to decouple electricity prices from gas prices. Although she did not disclose details of the plan, Bloomberg cited an EU diplomatic source saying the Commission could present detailed plans as early as this week.

Within the EU, voices are calling for measures such as a gas price cap and the elimination of speculative forces. According to Bloomberg, the EU had already considered imposing a cap on gas prices earlier this year in preparation for Russia's reduction in gas supply.

Petr Fiala, Prime Minister of the Czech Republic, the rotating EU presidency country, announced that he discussed the gas price cap plan with German Chancellor Olaf Scholz during Scholz's visit to the Czech Republic. At a joint press conference, Chancellor Scholz expressed his pleasure at Prime Minister Fiala's proposal for a gas price cap and said he was confident that the EU would reach an agreement quickly.

The Czech government plans to convene an emergency energy ministers' meeting on the 9th of next month. Prime Minister Fiala stated that the Czech presidential office would mediate to prepare energy price measures before the energy ministers' meeting on the 9th.

Belgian Prime Minister Alexander De Croo also expressed support for the introduction of a gas price cap, stating that immediate market intervention is necessary. French President Emmanuel Macron emphasized that reforms must be implemented to protect the market from speculative factors.