Italy’s Cingolani: Wholesale gas price cap is necessary to stop manipulation

Italian Minister for Ecological Transition Roberto Cingolani said his country’s proposal to limit wholesale gas prices in the European Union is gaining support, adding it may be the only sustainable solution for the crisis. He suggested there is manipulation at the TTF gas exchange.

“Companies are closing and families are in trouble not because there is a real lack of gas, but because someone behind a keyboard has decided to raise the price, to have to make them pay more. We need to set a limit… We need to avoid a scenario in which someone wakes up one morning and sets a crazy price,” Minister for Ecological Transition of Italy Roberto Cingolani said.

It is not a gas crisis, but a market crisis, in his view. Cingolani suggested there is manipulation at the TTF gas exchange, where European benchmark prices are set.

Something can be achieved

As for Italy’s proposition to cap wholesale gas prices so that energy inflation is contained and peaks can be cut, he said many countries are starting to look at it with great attention and that the European Commission “is talking about it.” Cingolani expressed optimism that “something” can be achieved and noted the initiative was initially opposed.

The energy crisis in Europe is worsening after Russia sharply reduced gas deliveries

Russia’s Gazprom has cut off or halved deliveries of gas to several countries in the European Union, prompting a jump in prices and emergency measures including plans to limit the supply to industrial facilities. Cingolani said the system should be changed so that the price of renewable electricity is independent of that from fossil fuels.

EU is reforming gas, electricity markets amid worsening energy crisis

The EU’s High Representative of the Union for Foreign Affairs and Security Policy Josep Borell said last week that the European Commission is developing a new electricity market where prices wouldn’t depend on gas. “This is part of our fight against climate change; to fix reasonable rules and to have a good system to fix energy prices,” he stressed.

The European Commission proposed in March to create a platform for common gas and hydrogen purchases at the EU level and outlined options to mitigate high energy prices. European Commissioner for Energy Kadri Simson recently said the bloc’s executive body would launch “a process of impact assessment and large consultation on the optimization of the functioning of the European electricity market, including the effect of gas prices on it.”

Portugal and Spain launched a gas price cap mechanism earlier this month for power utilities in order to bring down wholesale electricity prices on the Iberian electricity market (MIBEL). Other governments are preparing similar measures.