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February 08
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Six European Union countries, including Germany and the Netherlands, have warned that limits on the level of gas price caps, Reuters reported, citing a letter from the countries' ambassadors to the EU.

The group of countries, which also includes Austria, Denmark, Estonia and Luxembourg, outlined their red lines on a proposed EU-wide gas price cap that the countries want to approve at a Dec. 13 meeting of energy ministers in Brussels.

"We are concerned by the lowering of the figures. The figures of the [gas price cap] ceiling and the triggers cannot be lowered any further or replaced," the six countries' ambassadors said.

The six countries are skeptical of price caps because they warn that it would disrupt the European energy market and make it difficult to buy fuel if gas suppliers divert cargoes to regions where prices are not capped.

The European Commission last month proposed a price cap that would take effect if the first month's TTF contract is 275 euros/MWh for two weeks, and would be 58 euros higher than the 10-day reference price for liquefied natural gas (LNG).

Belgium, Italy, Poland and Greece are among the countries that say a price cap is necessary to protect their economies from high gas prices. They want a much lower price cap than the Commission has proposed.

EU countries are negotiating the proposal and have already taken steps to lower the price cap. The latest compromise under discussion is a cap of 220 euros/MWh with less stringent conditions to trigger it, according to a document seen by Reuters, although it is expected to be revised before a deal is reached.

Germany and other skeptics in favor of the restrictions have also demanded tougher safeguards in case the price cap causes unintended consequences, which gas market participants warn could be serious.

They have proposed "red-light criteria" that would automatically suspend the price cap in the event of an emergency, for example if demand for gas in Europe jumps. Under the EU's original proposal, only the Commission could suspend the cap.

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