Thread by @DaveKeating

#EUCO will today see Latin-Germanic clash on energy prices. It's very technical but here's an explainer I wrote for @EnergyMonitorAI.

Electricity prices are tied to gas, and they're going through the roof. 🇪🇸Sanchez wants to change that. 🇩🇪🇳🇱 say no.
energymonitor.ai/sectors/power/…

The disagreement on energy prices could blow up #EUCO today. 🇪🇸Sanchez is threatening to veto #EUCO conclusions if there's no price changes.

Team Sanchez (🇮🇹🇵🇹🇬🇷🇧🇪) say urgent relief is needed.

🇩🇪🇳🇱 say intervention is not a silver bullet & caps risk suppliers ending contracts

🇩🇪🇳🇱 also point out market intervention setting energy prices is a double-edged sword.

You could set a price that's lower than market rate now, only to see the market rate fall in a few months and end up with Europeans paying more than the market rate. Long-term consequences.

Entering #EUCO this morning, 🇧🇪Belgium’s (Liberal) Prime Minister @AlexanderDeCroo says he will push for energy price caps.

“Prices today have nothing to do with reality…I know that intervening in the market is not an easy thing to do, but we’re at war.”

Key to watch in this debate will be the Nordics, who usually align with 🇩🇪🇦🇹🇳🇱 against market intervention but are wavering on this.

Entering #EUCO, 🇫🇮Finnish PM @MarinSanna says she's “open to all kinds of solutions” and leaders shouldn't "close any door”.

Things are getting heated inside #EUCO as leaders debate capping energy prices right now.

🇵🇱Polish PM Morawiecki just accused 🇳🇱Dutch PM Rutte of being against price cap because he's 'protecting a few Dutch energy traders', according to a source close to the talks.

Leaders are getting frustrated with #Scholz because he doesn't seem to have his predecessor's ability to find compromise, the source says.

"General feeling in the room is that with Merkel we would have gotten a deal on the cap a long time ago."

Things are not going well at #EUCO energy price capping discussion.

Apparently Spanish PM Pedro Sanchez has left the room. Meeting paused, I'm told. Looks like this summit is going to go later than planned.

Leaders are back in the room, let’s see if tempers have cooled.

Sanchez is very serious about his threat to veto whole conclusions if energy price capping isn’t agreed, I’m told. That could mean scuppering agreement on joint gas purchasing, where there has been consensus found

Plenty of comparisons being made right now between Pedro Sanchez and David "Three Shirts" Cameron who would keep summits going longer than they had to for theatrics intended for domestic audience.

I don't think that's quite fair to Sanchez, Cameron's theatrics had no substance.

Today's 🇪🇺#EUCO summit is being held up by a fight that's as complicated as it is contentious - whether to have a market intervention to cap Europe's soaring energy prices.

🇪🇸Pedro Sanchez is threatening to veto whole Council Conclusions if they don't get prices under control.

Still no solution on energy prices. Various amendments floating around. This could go late.

Huge domestic pressure in Spain, and elsewhere, for leaders to do something. Seems like it would be difficult to adopt these conclusions without something significant on prices.

Proposed draft on the table now, apparently acceptable to 🇪🇸&🇵🇹, says "the Commission stands ready to urgently assess the compatibility of emergency temporary measures in the electricity market"

Com would then propose an accelerated procedure. 🇮🇹&🇧🇪 on board with this I'm told.

The Commission would ensure that the temporary measures "reduce spot electricity market prices for companies and consumers and they do not affect trading conditions to an extent contrary to the common interest"

Separately, on gas joint purchasing, 🇮🇹&🇧🇪 have formed a united front to have a price cap in it (to give it teeth).

But 🇩🇪 opposing this idea.

Another interesting idea for that 🇪🇺 gas joint purchasing platform, now being discussed, is to invite non-EU countries in the Western Balkans and 🇺🇦#Ukraine, to participate.

As the sun sets, the big question is what conclusions Spain can sign up to.

The conclusions will either ask the Commission to draw up measures to cap prices / change pricing mechanism, or they won't. Is there a middle ground acceptable to both Sanchez and Rutte?

"It's an intense debate," says an EU official. But "finding a reasonable way out is coming closer"

"We all want to bring the prices down. In the text that is now on the table we have made huge progress."

White smoke! They have adjourned the summit.

No word yet on conclusions.

"All conclusions including on energy adopted" says an EU official.

Conclusions yet to be published but I'm told they include language on market decoupling - allowing each country to temporarily decouple prices *on their own*.

If that's the case, Spain should be pleased.

“The Iberian peninsula has a very special situation,” says President Von Der Leyen. “We agreed special treatment for them so they can manage the electricity prices in the way we have been discussing at the Council.”

She notes this was discussed “intensively”, doesn’t elaborate.

German Chancellor Scholz downplaying what was agreed today on energy prices, saying the Commission is going to study.

"We see the problem but not the solution just yet"

Here’s the text we’ve ended up with.

As I read it, Spain and Portugal can now decouple prices - but subject to an assessment by the Commission on whether it negatively impacts the EU market as a whole.

And the spin race is on as the different prime ministers do their national briefings.

Like Scholz, Rutte says what was agreed today on energy price caps hands this over to the Commission to evaluate and this issue isn't quite settled yet.

🇧🇪Belgian PM De Croo says what we've ended up with on price caps was an idea put forward by the Belgians that was able to break the impasse.

He suggested the Commission start working on a system of price caps together with industry, which was crucial “to get 🇩🇪🇳🇱 over the line.”

#DeCroo has had a good summit.

Not only was he part of the compromise that ended the price cap impasse, he partnered with Italy to push through a robust 🇪🇺 gas joint purchasing program.

This idea faced fierce resistance just a few months ago. #UkraineWar changed everything.

For his part, 🇮🇹Italian PM Draghi suggests resistance to (gas) price caps has come from powerful business interests.

"The extraordinary amount of profits explains their resistance to a price cap...some companies fear that this will generate reactions from the Russian supplier."

🇪🇸Sanchez & 🇵🇹Costa doing their presser together

Sanchez (who insists he didn't threaten veto) says they're satisfied with this text. It "will allow both governments to lower energy prices"

(In the end they got what they came for, but maybe with less certainty than they wanted)