Brussels approves the cap on the price of gas to lower electricity in Spain and Portugal

Approval of the European Commission to the top of the gas in Spain and Portugal. It is temporary, for 12 months, it will not be €30 as requested by Madrid and Lisbon, but €50 on average, but it implies the implementation of a measure that will reduce the electricity bill by putting a cap on the price of gas so that its impact on the electricity bill is less. In addition, the Iberian Peninsula will be the only place in the European Union where it is put into practice.

Spain and Portugal finally send to Brussels their detailed plan to lower the light

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The price of electricity in the Iberian wholesale market stood at 208.74 euros per megawatt hour (MWh) this Monday, according to data from the Iberian Electricity Market Operator (OMIE) cited by Efe.

The first political agreement that unblocked the measure took place on March 25, in Brussels, after an intense summit of EU leaders who agreed to recognize Spain and Portugal as an Iberian exceptionality due to their minimal electrical interconnection with the rest of the countries –a 2 .8%–.

From there, a month later, the vice president of European Competition, Margrehte Vestager, closed another political agreement, more specific, on the technical details.

But, since then, days have passed without Spain and Portugal sending the formal proposal for evaluation by Brussels. After the European Commission itself publicly claimed it last Tuesday, Madrid and Lisbon sent it on Thursday afternoon. And, as announced by the Portuguese Prime Minister, António Costa, the European Commission has given its approval this Monday, Europe Day, a holiday in the European institutions. Sources from the Ministry of Ecological Transition have also subsequently confirmed this to "The Ministry of Ecological Transition confirms the Commission's approval of the proposal by Spain and Portugal to limit the price of electricity through a maximum ceiling at gas price. We continue working to be able to take it to the Council of Ministers tomorrow or as soon as possible

“This morning the European Commission has given the green light to the Portuguese and Spanish proposal to avoid contamination of the price of electricity due to the gas increase. It is a far-reaching measure," Costa said in Strasbourg, according to Efe: "We are currently coordinating with the Spanish government how we approve the respective legislation, and we will do everything to be able to do so tomorrow. We will make an extraordinary council of ministers to approve this measure and that it enters into force simultaneously throughout the Iberian Peninsula”.

30% discount on the bill

The initial proposal from Spain and Portugal was to set a price of 30 euros per megawatt hour (MWh) for generation with natural gas, but they finally agreed with Brussels to raise that cap for combined cycles to 50 euros/MWh, which will be applied for a period of one year, starting with a lower figure of 40 euros/MWh. To achieve this political agreement, the idea that this price would be different for energy exports to France also had to be discarded.

The difference between the real price of gas and the fixed cap will be charged to consumers, but the result will be a significant net saving on the bill. A week ago, the CEO of Endesa, José Bogas, estimated the cost of the measure at 6,000 million euroswho will finance it in the first instance the consumers who are going to benefit from it first: those directly exposed to the wholesale market. In the case of the Spanish market, they are the majority of the industrial and domestic ones covered by the semi-regulated rate, the voluntary price for small consumers. Subsequently, compensation to electricity companies to cover the difference between the cap on gas generation and the cost of this raw material will be charged to those with longer-term contracts, as they expire. reports Antonio M. Velez.

According to the vice-president Teresa Ribera, the measure will result in a 30% drop in the number of consumers covered by the PVPC, which is covered by around 40% of households and to whom the president of Iberdrola, Ignacio Sánchez Galán, described this Thursday as "fools" because they are paying more, although free market rates (more stable, but higher until this energy crisis) are already experiencing sharp increases, according to the Facua consumer association.

This last company is the one that has most openly opposed the measure, which has been very well received by the big industry, which covers 70% of your electricity consumption in the pool. Last Wednesday, the Alliance for Competitiveness, in which the large employers of the automotive, steel and food industries, among others, are integrated, publicly thanked Ribera for his efforts to implement this measurebut demanded that in addition to this cap on gas, which they celebrate, power companies be forced to auction part of their cheap energy, by virtue of a mechanism announced by the Government last September.

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