Greece’s Prime Minister Kyriakos Mitsotakis, in a letter to European Commission President Ursula von der Leyen, outlined a proposal for a six-point plan for dealing with the economic repercussions of soaring energy prices.
In his letter Mitsotakis stresses the necessity for immediate and decisive action to avert an additional cost for EU citizens, EU economies and the successful implementation of the European Green Deal.
Mitsotakis noted that the market’s benchmark prices for natural gas in recent months, especially after December, were no longer driven by the normal forces of supply and demand, citing the findings of a recent study by the European Union Agency for the Cooperation of Energy Regulators (ACER) and the European Commission’s Gas Coordination Group.
“In reality, a decisive role in shaping prices is now played by political statements and the fears arising from the Russian invasion of Ukraine, which lead to uncertainty, huge price fluctuations and profiteering,” he noted.
“This means that we do not have a problem of quantity but we have a problem with prices,” he added.
The prime minister’s plan for temporary measures called for:
1. A price cap for the Title Transfer Facility (TTF), using as a benchmark the highest price for natural gas before the crisis.
2. Daily Price Limit as a protective measure, restricting TTF price fluctuations within a fixed range (for example, +/- 10 percent)
3. Setting TTF prices as an emergency measure if there are announcements concerning the flow of natural gas through pipelines from Russia.
4. Imposing a cap on gross profit margins on the wholesale electricity market, possibly of the order of 5 pct, based on a monitoring of production costs by market regulators and the Levelised Cost of Energy (LCOE) at power plants.
5. Only permitting trade with physical delivery for a specified time period
6. Boosting liquidity in the natural gas market by linking the EU/US/Asia markets (for example, by enhancing cooperation with China on LNG shipments, with a possible cap on transportation costs to eliminate incentives for profiteering).
Mitsotakis noted that all the above options were significant market interventions that have been used before in emergency situations for other markets, in order to balance them, while for some markets they are permanent.
The letter was sent on Tuesday, with copies also sent to European Commission Vice President Frans Timmermans, in charge of the European Green Deal, European Commissioner for Energy Kadri Simson and the Commission’s Director-General for Energy Juul Joergensen Ditte.
PM Mitsotakis held a emergency cabinet meeting on Wednesday morning and said that the government will announce some relief measures for households and businesses after ten days.
Meanwhile, fuel went much over 2 euros per liter on Wednesday, reaching €2.485 on Cyclades islands, €2.359 in Dodecanese, €2.487 on Samos, €2.200 in Thessaloniki, €2.179 in Athens. (source: Fuel Prices Observatory by Development Ministry.
Some 60% are taxes and special fees, while the Value Added Tax remains at 24 percent.