EU’s Gas Market Correction Mechanism Calculated Until February 2024: Council

MOSCOW (Sputnik) – The European Union’s new market correction mechanism (MCM) for limiting prices on certain gas futures will apply until February 2024, with a possibility of extension, the European Council said on Tuesday.

“While the mechanism is active, transactions concerning the natural gas futures that are within the scope of the MCM above a so-called ‘dynamic bidding limit’ will not be allowed to take place,” the Council said.

The “dynamic bidding limit” is calculated by adding 35 euros per MWh to the global reference price for LNG but no less than 145 euros per per MWh.

Once activated, the dynamic bidding limit will apply for at least 20 working days. It will be deactivated either if it remains below 180 euros per MWh for last three consecutive days or under a regional or EU-level emergency, the Council said.

“The regulation will enter into force on February 15, 2023. The regulation is temporary and will apply for one year,” the statement said.

By November 1, 2023, the European Commission will provide an overview of the new legislation, which creates a market correction mechanism, and will be able to extend its validity period.

On Monday, EU energy ministers reached a political agreement on a temporary mechanism to limit excessive gas prices, setting a price cap at 180 euros ($191) per megawatt-hour (MWh). It will be automatically activated when the month-ahead price at the largest European gas hub TTF exceeds 180 euros per MWh for three working days and when this price is 35 euros higher than the reference price for LNG on world markets.

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