The European Commission intends to propose this week a "dynamic" limit on natural gas prices in the EU and binding limits on the extent to which traded prices can fluctuate in a single day, Reuters reported, citing a draft proposal.

The proposal, to be agreed by EU governments, would task the European Agency for Cooperation of Energy Regulators (ACER) with setting a benchmark price for liquefied natural gas that the EU buys by March 23.

The Commission is recommending potential intervention in the price of the Dutch TTF, which is widely used in Europe for contracts and hedging.

The EC would "as a last resort" propose setting a market-based "dynamic" price at which natural gas transactions can take place on the TTF spot market under certain conditions.

The draft states that these measures should not affect the reliability of supply, lead to an increase in gas consumption or affect the orderly functioning of energy derivatives markets. Claims that the measures will be temporary - no more than three months.

Other EU gas trading centers will be pegged to an adjusted TTF spot price through a dynamic price corridor.

The Commission's draft proposal also states that EU trading venues must set a limit on the extent to which energy derivatives can move up or down in a single day by January 31.

These proposals must be approved by EU governments, which have been arguing for more than a month since the Commission first proposed a price cap on Russian gas alone in early September.

EU members such as Germany, Austria and the Netherlands have said that price caps could lead to gas shortages and discourage energy conservation.

Others supported broad price caps. Belgium, Greece, Italy and Poland want a price corridor for wholesale deals, which would mean a price range with a central value below the market price.

EU leaders intend to discuss options later this week.

The European Commission's proposal also includes the idea of joint gas purchases, a solidarity mechanism to avoid sharp variations in supply across the bloc, and a desire to reduce gas demand.