The idea of a cap is opposed by most member states, people familiar with the matter tell Bloomberg, and industry has voiced its concerns as the European Union's executive prepares to unveil a plan on 26 February to boost industrial competitiveness and ensure affordable energy.

Gas prices have more than doubled in the last 12 months, rising to a two-year high this week on concerns over depleting supplies.

The idea of a price cap

This was previously put forward by former European Central Bank president Mario Draghi in last year's competitiveness report. Some officials have referred to it as a possible measure in a toolkit that could be used in a crisis, said the people, who asked to remain anonymous when commenting on private conversations.

The industry's opposition was expressed in a letter to Commission President Ursula von der Leyen signed by 11 associations, including oil and gas producers, energy traders, clearing houses and energy exchanges.

"We believe that this measure, if announced, could have far-reaching negative consequences for the stability of European energy markets and security of supply across the continent," they wrote. "A price cap does not lower the global market price for energy, but can lead to upward pressure and increased price volatility in Europe," the letter states.

A Draghi plan

Energy prices have fallen significantly since their peak during the energy crisis, but remain stubbornly high. Von der Leyen has set lowering energy prices and increasing industrial competitiveness as a policy priority for the Commission during her second term.

European gas prices have skyrocketed as a colder winter combined with lower volumes from Russia are depleting supplies at the fastest rate in years. The prospect of increased demand this year to replenish reserves in the warmer months means that spring and summer gas prices will rise to unusually high levels.

In last year's report, Draghi suggested limiting speculative opportunities and recommended that EU regulators, following the example of the US, should be able to apply financial position limits and "dynamic caps" when spot or derivative prices in the region deviate significantly from global market prices.

The concept of a price cap is not new in Europe.

During the energy crisis, the EU introduced a price cap that would have been triggered if prices had exceeded €180 per megawatt hour for three working days and were at least €35 per megawatt hour higher than prices on the global market. This price cap was never triggered and expired at the end of last month.

Spain and Portugal had introduced a temporary price cap on gas for electricity generation after being exempted from EU energy market rules.

The EU is trying to reduce energy costs to keep pace with the US and Chinese economies in the transition to a cleaner economy. However, it is limited in what it can do in the short term. It is also in a race to secure energy supplies and it will be difficult to find the right balance between low prices and sufficient gas supplies.