STRASBOURG, November 22. /TASS/. The European Commission (EC) suggests a mechanism of energy market correction with a gas price cap of 275 euro per MWh at the Title Transfer Facility (TTF) hub, EC said in its press release.

"The Commission has continued its response to the ongoing energy crisis by proposing a Market Correction Mechanism to protect EU businesses and households from episodes of excessively high gas prices in the EU," EC said.

The proposed instrument consists of a safety price ceiling of 275 euro on the month-ahead TTF derivatives, EC noted. The mechanism will be triggered automatically when two conditions are met at the same time, if the front-month TTF derivate settlement price is above 275 euro for two weeks and when TTF prices are 58 euro higher than the LNG reference price for ten consecutive trading days within the two weeks.

"When these conditions are met, the Agency for the Cooperation of Energy Regulators (ACER) will immediately publish a market correction notice in the Official Journal of the European Union and inform the Commission, European Securities and Markets Authority (ESMA) and the European Central Bank (ECB)," the EC informed. "The following day, the price correction mechanism will enter into force and orders for front-month TTF derivatives exceeding the safety price ceiling will not be accepted," it added.

The mechanism can be activated as of 1 January 2023.

"Today, we propose to put a ceiling on the TTF gas price to protect our people and businesses from extreme price hikes. The mechanism is carefully designed to be effective, while not jeopardizing our security of supply, the functioning of EU energy markets and financial stability," Commissioner for Energy Kadri Simson said.