The cap on gas will reach electricity bills from mid-July

The vice president, Teresa Ribera, in Congress in a file image. / CR

The reduction will go from 15% to 20% for households with a regulated rate and will achieve, according to Ecological Transition, lower inflation by eight tenths

Jose Maria Waiter

As of next Tuesday, June 14, the price of daily electricity generation that has given so many shocks in the last year will be limited after the European Union has authorized Spain and Portugal to cap the cost of gas in the market. It will be the first day in which the so-called 'pool' begins to notice to what extent limiting the gas cost to 40 euros/MWh -this Thursday it is above 85 euros/MWh- can lower the price of electricity.

With the system in place, consumers will start to notice it in their pockets a month later. In other words, it will not be until the electricity companies begin to issue their bills in mid-July when households will see the full impact of the measure. Each firm issues receipts depending on their own billing cycles, so July will be well under way when all customers will receive the measure.

The Third Vice President of the Government and Minister for the Ecological Transition and the Demographic Challenge, Teresa Ribera, assured yesterday that this mechanism "will be the same" in Spain and Portugal. In a press conference held at the Ministry, Ribera stressed that, except for "some specific differences, the rules are the same" for both countries, thus ruling out the existence of some asymmetries, such as the fact that in Spain the extensions and renewals of contracts passed to offset the cost of combined cycle plants, while in Portugal only renewal was considered as such, with extensions being exempt.

This cap on gas of an average of 48 euros per megawatt hour (MWh) for one year for the generation of electricity, will allow Spanish consumers to save between 15% and 20% of what they paid in the absence of the mechanism. Initially, the Executive estimated that the discount would exceed 30%. However, the negotiation with the European Commission and Portugal has resulted in a distribution of the costs of this measure among all consumers: those who are in the regulated market will assume it from the first moment, with which the reduction will be less than the Estimated; and those who are in the free market will notice it when their current contracts are renewed.

According to the European Commission, the measure implies a state aid of 8,400 million euros -6,300 million for Spain and 2,100 million for Portugal- aimed at reducing wholesale electricity prices in the Iberian market (Mibel) by reducing costs input from power plants fueled by fossil fuels.

With the measure in place, the Government hopes to moderate the escalation in prices that Spain has suffered since the beginning of the year. Ribera estimates that the cap will help reduce inflation in Spain "around eight tenths or one point" in the coming months. Until May, inflation was 8.7%, according to advance data from the INE. Estimates suggest that up to 70% of this price increase is explained by energy costs, both electricity and other fuel-related products. Ribera has pointed out, however, that it will be necessary to see how the rest of the energy raw materials behave, not just gas or oil.

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