The temporary mechanism designed by the European Commission would impose a dynamic price limit for transactions on the Dutch Title Transfer Facility, whose main index is the benchmark for all gas traded on the continent. Commission President Ursula von der Leyen said earlier this month that the TTF no longer reflects the bloc’s energy reality after Russia cut supplies to Europe and the share of gas from Moscow dropped from 40% to around 7%.

“This will help avoid extreme volatility and price hikes, as well as speculation which could lead to difficulties in the supply of natural gas to some member states,” the commission said in a draft document seen by Bloomberg News. 

The EU executive arm has a policy of not commenting on documents that haven’t been published and the draft may still change before adoption scheduled for Tuesday. In the next step, the package will be discussed by EU leaders at their summit on Oct. 20-21 in Brussels.

The package of measures would also include a temporary intra-day price spike cap mechanism to avoid extreme volatility in energy derivative markets, according to the draft. The aim is to “ensure sounder price formation mechanism,“ protecting the region’s energy companies from large spikes and helping them secure supply in the medium term.

The commission has been under mounting pressure from national governments to impose a cap on gas prices. Italy, Greece, Poland and Belgium last week proposed a limit on the region’s biggest trading hubs, which would include a corridor allowing prices to fluctuate by around 5% for example. They suggested the price range would be regularly reviewed to reflect the level of other key energy benchmarks such as crude oil, coal and gas prices in North America and Asia.

The dynamic price limit would be put in place while the EU works on a new complementary benchmark for liquefied natural gas, according to the commission’s draft. The new index would be started by the end of 2022, with the benchmark projected to be available in time for the next gas storage filling season in early 2023.

A number of countries have also called for severing the link between gas and power prices through imposing a price cap on the fuel used for electricity production, an idea that the commission is not planning to put into operation. While such a model has lowered prices in Spain and Portugal, it bears some risks if introduced across the bloc, it said in the draft.

The commission is also planning to adopt tools to boost liquidity in energy markets by increasing the clearing threshold for non-financial counterparties to 4 billion euros and broadening the list of eligible assets that could be used as collateral for one year. 

To increase its resilience and leverage in talks with alternative gas suppliers, the commission wants to strengthen its joint purchase platform, which would coordinate the filling of gas reserves. If storage supplies are depleted at the end of this winter, meeting the 90% filling goal by November 2023 may be more difficult than for this winter, according to the draft.

The plan is to mandate member states to jointly purchase gas accounting for at least 15% of their storage and allow companies to form a European consortium. Russian supply sources would be excluded from participation.