EU to Call Emergency Energy Talks as Prices Set More Records

The European Union will call an emergency meeting of energy ministers to discuss bloc-wide solutions to the spike in power prices.

The Czech Republic, which holds the European Union’s rotating presidency, will summon the gathering to debate “concrete” measures to tackle the energy crisis following an agreement with European Commission head Ursula von der Leyen, according to Prime Minister Petr Fiala.

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The Czech leader later on Friday said the surging electricity prices are the result of a “market failure” and called for an EU-wide measure to cap them. He is seeking backing for the idea among other member states and plans to discuss possible price limits with German Chancellor Olaf Scholz on Monday.

Europe is grappling with the worst energy crisis in decades, with spiking costs of gas and electricity driving inflation, undermining the euro currency and threatening to drag economies into recession as Russia squeezed supplies since its invasion of Ukraine six months ago.

Failure to contain the crisis risks spurring social unrest and political upheaval, if the supply crunch leads to blackouts and cold homes this winter. Europe’s politicians have already earmarked about 280 billion euros ($281 billion) to ease the pain of surging energy prices for businesses and consumers, but the aid risks being dwarfed by the scale of the crisis.

The Czechs and some other bloc members are calling for a common policy approach as individual countries aren’t able to shoulder surging energy costs with local measures.

“These are prices that no one can afford,” Fiala told reporters in Prague. “I’m trying to win support for a pan-European solution.”

The Czech Industry Ministry said it’s looking for a specific date for the emergency meeting and wants to convene it “as soon as possible.”

French Skepticism
Earlier this week, France reacted skeptically to the idea of setting limits on power prices, saying its situation is different from other European countries thanks to government measures offering protection against inflation.

Read more: Price of Power Spirals Out of Control in Europe’s Key Markets

Power costs are smashing records on an almost daily basis as Russia constricts the supply of natural gas ahead of the crucial winter heating period. The price in Europe’s two key markets surged more 25% on Friday, the latest chaotic spike that’s upending economies across the continent.

The French year-ahead contract rose as much as 25% to 1,130 euros a megawatt-hour on the European Energy Exchange AG Friday. The German equivalent also gained to a record, rising as much as 33% to 995 euros a megawatt-hour for a gain of about 70% this week. In oil market terms, it’s the equivalent of over $1,600 a barrel.

European governments have started to limit energy use, banning outside lighting for buildings in Germany and lowering indoor heating temperatures. In the UK, energy bills are set to soar in October after the energy regulator raised its cap on costs.

The Czech government on Wednesday approved measures to help households cope with high inflation ahead of the coming winter season.

Czech Prime Minister Petr Fiala said in a statement following a government meeting that the inflation assistance package totaled 177 billion Czech crowns (7.15 billion U.S. dollars).

According to the European Union (EU) Independent Fiscal Institutions Network, the Czech Republic has the fourth-highest amount of assistance relative to gross domestic product (GDP) in the EU, Fiala said.

The aid package includes energy-saving tariff and the remission of fees for renewable energy sources, according to the prime minister. Targeted support is also designed for more vulnerable groups, including a 5,000-crown allowance to families with children and a 2,500-crown increase in pensions.

Fiala said that his government also tasked the Ministry of Industry and Trade with preparing updated estimates for energy price increases so that assistance could match real costs.

"If, despite all these measures, some people find themselves in a difficult life situation, a series of other measures are prepared as part of assistance in material distress, such as housing allowance, extraordinary immediate assistance, subsistence allowance, etc.," Fiala said, noting the need for a common European response to rising energy costs.

Inflation in the central European country reached a dizzying 17.5 percent in July, according to figures published by the Czech Statistical Office (CSU), with most of the blame put on soaring energy prices.

Amid the ongoing Russia-Ukraine conflict, Prague has vowed a tough stance against Russia -- including sanctions and potentially halting critical gas imports from Moscow altogether, which many speculate would further drive up inflation.