MNI BRIEF: Ministers Seen Backing ECB's Energy Operator Scheme

EU energy ministers look set to back credit line support for energy market participants facing high margin calls, as well as a reduction of consumer demand for gas, a senior EU official said. But a mooted capping of Russian gas prices -- although supported by some member states -- looks a less likely option, the official added.

The idea of an European Central Bank credit line for market participants suffering high margin calls was mooted in the Czech EU Presidency’s ‘non-paper’ ahead of Friday’s meeting, with the option now winning strong backing among EU states, the official said

There was not yet enough support amongst member states to trigger mandatory cuts in gas consumption, although the official noted this could change given the indefinite shutdown of Nordstream 1, but other measures to cut demand was also favoured. The option of temporarily capping electricity prices set by ‘inframarginal generators’ – non-gas power generators, using cheaper fuels, like hydro, renewables or nuclear, and so profiting from high gas-based electricity prices set by the whole market – was also likely to get support. Once approved, the favoured options are likely to become EU Commission proposals in days.

Gas and electricity prices continue to be the main driver of headline inflation across the eurozone and the wider EU, forcing the ECB into a 75bps rate hike Thursday, a move likely to be followed by further hikes in coming months.