According to the European Union Agency for the Cooperation of Energy Regulators (ACER) on February 1, 2023, on 22 December 2022, the Council Regulation (EU) 2022/2578 established a gas market correction mechanism (MCM) to protect EU citizens and the economy against excessively high energy prices. It enters into force on 1 February 2023 for a period of one year and tasks ACER with the calculation and publication of the MCM reference price.
Based on the daily collected data, ACER will publish the MCM reference price no later than 23:59 CET every weekday. Find the daily MCM reference price here.
Prices on 1 February 2023 are well under the MCM activation levels.
What is the MCM reference price and how is it calculated?
The MCM reference price is the average price of several Liquefied Natural Gas (LNG) marker prices as assessed by different entities and the front-month National Balancing Point (NBP) derivative settlement price.
In order to calculate the daily MCM reference price, ACER needs the following information:
- The LNG Northwest Europe Marker price assessment;
- The LNG Mediterranean Marker price assessment;
- The LNG Northeast Asia Marker price assessment;
- The front-month NBP derivative settlement price; and
- The price of the ACER’s daily LNG price assessment report.
The values of the three LNG marker price assessments are derived from data administered by Platts Benchmark B.V. and Argus Benchmark Administration B.V. As the MCM reference price is expressed in EUR/MWh, ACER uses European Central Bank’s Euro foreign exchange rates for the currency conversion where needed.
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 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 the 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.
