UK Markets open in 57 mins

EU's von der Leyen backs price cap on Russian pipeline gas

·2-min read
Baltic Sea Energy Security Summit

MURNAU, Germany (Reuters) - Europe needs to impose a price cap on Russian pipeline gas, EU Commission chief Ursula von der Leyen said on Friday, to foil what she said were Russian President Vladimir Putin's attempts to manipulate the bloc's energy market.

She also called for measures to skim off some windfall profits that electricity suppliers have made from the gas crisis, using the money to support vulnerable citizens and companies.

"I firmly believe that it is now time for a price cap on Russian pipeline gas to Europe," von der Leyen told reporters on the sidelines of a meeting of German conservative lawmakers in the town of Murnau.

"A gas price cap can be proposed at European level, and there also is a legal foundation at European level to skim profits temporarily as an emergency measure at a time of crisis," she added.

In the EU's current electricity market, generators sell their power at a price set by the last power plant needed to meet demand - often, a gas plant, which has meant the recent surge in gas prices has driven up the cost of electricity.

Russia has slashed gas deliveries to Europe since invading Ukraine, which has sent gas prices rocketing to record-high levels. Countries are scrambling to find alternative supply as they look to fill gas storage for winter.

European Union energy ministers will meet on Sept. 9 to discuss their response to the price surge.

On Sept. 14, von der Leyen will outline the Commission's ideas for emergency EU measures to tackle the price spike, a senior commission official said on Thursday.

"Over the last weeks and months, we have been working hard at European level to fight back against these (Putin's) manipulations," von der Leyen said in Murnau.

"We have agreed on joint (gas) storages and reached a filling level of 80% on average by now, two months earlier than expected," she said, noting Norway is now supplying more gas to the bloc than Russia.

"But all this is not enough: We see that the electricity market does not work anymore because it is massively disrupted due to Putin's manipulations," von der Leyen said, adding that Russia was now opting to flare gas rather than deliver contracted volumes to Europe.

(Reporting by Reuters TV; writing by Sabine Siebold and Paul Carrel; editing by Matthias Williams and Jason Neely)