European energy industry urges EU not to cap gas prices

By Kate Abnett

BRUSSELS (Reuters) - Europe's gas and energy trading industries have urged the European Union not to cap gas prices, as Brussels seeks ways to protect consumers and businesses from energy price spikes.

The European Commission is preparing a package of measures, due to be proposed on February 26, to improve industries' competitive edge and help bring down energy prices.

Benchmark European gas prices rose this week to a two-year high of 58 euros per megawatt hour (MWh), boosted by cold weather and depleting gas storage tanks. That has added to concerns about the higher energy prices European firms face, compared with competitors in the U.S. and China.

Industry participants are worried that this could prompt Brussels to revive the idea of capping gas prices, weeks after a previous EU gas price cap introduced during the 2022 energy crisis expired after never once being triggered.

"We believe this measure, if announced, could have far-reaching negative consequences for the stability of European energy markets and the security of supply across the continent," the industry groups said in a letter to Commission President Ursula von der Leyen.

A cap would "harm the trust" in the EU's benchmark gas price, prompt market participants to switch to use other reference gas prices outside the EU, and make it harder for Europe to attract liquefied natural gas cargoes in price-competitive global markets, the letter said.

Its signatories included industry associations Eurogas, Energy Traders Europe, the association of energy exchanges Europex, and financial markets association AFME.

The Financial Times reported on Wednesday the Commission is considering a gas price cap as part of this month's package of support for industry, citing people with knowledge of the talks.

A senior EU official told Reuters on Wednesday the idea was not being considered.

The EU's previous gas price cap had also been opposed by industry and by national governments, including Germany and the Netherlands, who warned it would hamper Europe's ability to secure fuel supplies.

The cap was designed to kick in if European gas prices hit 180 euros per megawatt hour. It was never triggered, as the benchmark EU gas price has not reached that level since Europe's energy crisis in 2022, after Moscow slashed gas deliveries to the region.

(Reporting by Kate Abnett; Editing by Bernadette Baum)