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On 1 February, the EU Agency for the Cooperation of Energy Regulators (ACER) published its first daily gas market correction mechanism (MCM) reference price, as required by the Council Regulation (of 22 December 2022). The Regulation established a gas MCM to protect against excessively high prices.
This MCM reference price is an average of several indexes and marker prices related to Liquefied Natural Gas (LNG) price trends. Starting from 1 February 2023, ACER is tasked to:
- calculate and monitor this MCM reference price for the activating the MCM; and
- publish the MCM reference price on its website every weekday by 23.59 CET.
Prices on 1 February 2023 are well under the MCM activation levels.
When is the MCM activated?
According to the Regulation, the MCM can only be activated as of 15 February 2023.
The MCM is activated if the front-month TTF derivative settlement price:
- exceeds 180 EUR/MWh for three consecutive working days, and
- is at least €35 above the MCM reference price for the same period of time.
In the event that the MCM is activated, a notice stating that a market correction event has occurred is published on the ACER website no later than 23:59 CET on the day of event.
Upon activation, orders on TTF derivatives (front-month to front-year) €35 above the MCM reference price cannot be accepted. Should the MCM reference price be lower than 145 EUR/MWh, the MCM bidding limit is set at 180 EUR/MWh.
The MCM bidding limit applies until:
- ACER publishes a deactivation notice 20 working days from the market correction event if the MCM reference price is below 145 EUR/MWh for three consecutive working days; or
- the European Commission suspends the MCM in case of significant deterioration of the gas supply situation in the EU.
See also ACER Director’s PPT to the Council Energy Working Party Meeting (31/01/2023) on ACER’s Preliminary Data Report (23 January 2023) on the market correction mechanism.
