Amid an ongoing energy crisis and two months of negotiations, ministers of energy for the European Union agreed to a gas price cap on Monday.
The cap will be effective for 27 countries across the continent as officials hope the measure will help drive down energy costs amid record-high inflation caused by the lack of Russian gas following the invasion of Ukraine earlier this year.
Ministers have set the cap to activate if energy prices surpass 180 Euros, equivalent to $191.11, per megawatt hour for three days, according to Reuters. The benchmark for the prices is based on the Dutch Title Transfer Facility.
Moreover, the cap will trigger if prices are 35 Euros higher than a reference price for liquid natural gas for three consecutive days.
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“We have succeeded in finding an important agreement that will shield citizens from skyrocketing energy prices,” said Jozef Sikela, an energy minister for the Czech Republic, during a press conference.
“We did our job, we have the deal. Another mission impossible accomplished,” Sikela added in a statement to members of the press.
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Starting on Feb. 15, 2023, the cap will be able to be triggered under the previously mentioned price conditions. The other EU member states will formally approve the measure.
Previously, officials from Germany had raised concerns that the policy cap would make Europe less attractive to gas suppliers in the global markets. However, officials did agree upon certain safeguards that would suspend the cap if gas supplies ran short or if it caused a significant drop in TTF trading.
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