Energy prices, difficult agreement at the EU summit

BRUSSELS – Two concrete results, expected, plus a postponement and a compromise solution that leaves more freedom to some countries, in particular Spain and Portugal. These are, in a nutshell, the conclusions of the long discussion on energy prices and the revision of the electricity market that the Heads of State and Government of the Twenty-seven reached this evening during the European Council in Brussels.

The concrete results concern the two proposals of the European Commission regarding mandatory gas storage for all Member States, with 90% filling of deposits on November 1st of each year (and 80% only for this year), and above all the possibility of voluntary joint purchases of gas on the market (and also of LNG and hydrogen) by Member States that want to participate, along the lines of what happened with anti-Covid vaccines. Joint procurement, managed by a Commission Task Force in consultation with the countries involved, will lead to more favorable contractual conditions and costs.

The postponement, announced by the President of the European Commission for May, concerns the conclusions on the possible decoupling of the price of electricity from the price of gas, to which it is currently indexed. The release was requested above all by the countries of Southern Europe, Spain, Italy, Portugal and Greece, which underline how the marginal model based on gas as a reference price could make sense when gas, also thanks to the abundant Russian supplies, was cheap and there were no supply problems. Today, with the war in Ukraine and the extreme volatility of the gas price, the situation is completely different.

Finally, the compromise solution was reached with regard to the request of the Southern countries themselves to be able to impose maximum price thresholds and to be able to intervene in various other ways on the formation of prices on the electricity market to limit or compensate price increases and redistribute profits, alleviating costs for families and businesses. The compromise consists in the fact that, while the Commission has undertaken to assess the feasibility of possible European solutions with various options, including maximum price thresholds, some Member States have managed to snatch the possibility of moving forward on this path from alone, with national solutions. In a language that is anything but clear and direct, point 16 of the Council conclusions states that countries wishing to propose temporary national measures in this regard must notify the Commission, which “will urgently assess their compatibility with the provisions of the Treaties and with the 2019 EU regulation on the internal electricity market “.

“In assessing this compatibility – the conclusions continue – the Commission will ensure” that the following conditions are met: that the measures reduce spot prices on the electricity market for companies and consumers, and that they do not affect commercial conditions to an extent contrary to the common interest. In making this assessment – the text specifies -, the temporary nature of the measures and the level of electricity interconnectivity with the single electricity market will be taken into account “.

The point of “interconnectivity” is crucial: it means that for some Member States compatibility with the rules of the electricity market could come not from the consistency of national measures with these same rules, but from a condition of isolation from the European electricity grid, which therefore it would not be affected.

This condition is typical of the two Iberian countries, Spain and Portugal, which are little and badly connected through the Pyrenees with the French and European electricity market, and could also affect other Member States not integrated into the continental synchronized electricity grid (the islands, Ireland, Malta and Cyprus, the Baltic countries, Sweden and Finland).

All in all, Italy, which strongly supported both the joint purchase of gas and compulsory storage, and which, like the other countries of the South, obtained the postponement of the conclusions on the decoupling of the price of gas from that of electricity ( leaving open the game that the northern countries wanted to close), can positively judge the results of the summit.

“There have been some steps forward on decisions to be made together in a very difficult moment; the Commission had already presented several options on the topic of energy supply, it was important to be able to have a result that was not divisive, and we are satisfied with the conclusion “, said the premier, Mario Draghi, in his press conference at the end of the European Council .

However, the compromise solution that will allow “isolated” national measures to intervene on prices in the electricity market does not appear to be of great use to Italy, given the full integration of the national network of the Peninsula with the continental one. And while the government of Madrid or Lisbon will rush to intervene by authority on the market to calm the prices paid by families and businesses, without fear of being blocked by Brussels, the government of Rome will have to be more attentive to the famous “constraints Europeans », also in this field.

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