EU Commission’s gas cap plan not right, may lead to higher prices, Spain says

MADRID (Reuters) – Spain’s Prime Minister Pedro Sanchez said on Wednesday the European Commission’s proposal to put a cap on natural gas prices is not going in the right direction and may even lead to price increases.

“Spain considers this proposal can have perverse effects, not gas price reductions but even price increases,” Sanchez said during a joint news conference with his Romanian counterpart.

After months of infighting within the bloc, the European Commission proposed to cap gas prices at 275 euros ($285) per megawatt-hour ahead of Thursday’s meeting of EU energy ministers, where they will discuss emergency measures to alleviate a potential energy crisis ahead of winter.

The proposal “is clearly not enough,” Sanchez said, adding: “We are not on the right path if this is the option”.

Several other EU member states have criticised the proposal, saying the price level at which the cap would kick in was too high.

Consultancy firm Eurointelligence said the Commission’s proposed criteria meant the cap was “clearly designed not to be used: It is, in other words, not intended to actually cap prices”.

($1 = 0.9650 euros)

(Reporting by Inti Landauro; Editing by David Latona; Editing by Kirsten Donovan)