Electricity costs in Spain exceed a new maximum since the Iberian limit came into effect, while Europe insists on adjusting the calculation of prices as they are outdated
Europe is unable to contain the staggering rise in electricity prices that it has experienced sharply over the past two weeks as a result of the rise in gas prices. The bill of all countries gets out of hand for one more day, including that of Spain, despite the Iberian cap being in force. And faced with this reality, without the severity of the meteorological winter yet to arrive, the European Commission proposed an “emergency intervention” in mid-August to appease the market.
The chairman of the executive, Ursula von der Leyen, has recalled what many countries, including Spain, have been insisting on since Russia began its invasion of Ukraine: that the current system of hourly and daily pricing “has been developed for different circumstances.” over decades ago. And that work is now underway on that intervention and on ‘a structural reform of the electricity market’.
The European Commission’s plans include a revision of the current mechanism, where the latest technology needed to meet all electricity demand is the one that determines the daily price. Because it’s the combined cycle power plants — which use gas to produce light — the ones that cost that, mark the most expensive, mark the final price, have gotten out of hand. Von der Leyen has indicated that this mechanism was designed “for different circumstances” and that it is behind the “exorbitant” prices paid on the continent in the context of the war in Ukraine by linking the price of gas to that of other energies.
In a speech at the Strategic Summit in Bled, Slovenia, where she called for a reduction of all energy dependence on Moscow and a stronger defense of democracy in Europe’s response to the invasion of Ukraine, the chairman of the Community Executive said insisted that “exorbitant prices” expose the “limitations” of the current electricity market design.
In this sense, he has called for a European response to Russian energy “blackmail” amid rising energy prices, raising the first doubts about European unity regarding the sanctions Europe is imposing on Russian crude oil imports. “The era of Russian fossil fuels in Europe is over and freeing us from blackmail will give us more power to defend the world order,” he said.
The average price of electricity for regulated tariff customers connected to the wholesale market increased by 8.5% on Tuesday compared to this Monday, to 459 euros per megawatt hour (Mwh), reaching a new maximum since the Iberian exception took effect .
This price is the result of adding the average of the wholesale market auction to the fee that the demand will pay to the cogeneration plants for the application of the ‘Iberian exception’ to cap the price of gas for electricity generation.
In this way, the price again rises sharply and exceeds the previous maximum since the entry into force of the ‘Iberian exception’ that marked last Wednesday, when it rose to 436.25 euros/MWh.
In the auction, the average price of electricity on the wholesale market (the so-called ‘pool’) for this Tuesday was set at 201.96 euros/MWh. The maximum price will be registered between 10pm and 11pm, at 237 euros/MWh, while the minimum for the day, of 160 euros/MWh, will be between 5pm and 6pm.
To this price of the ‘pool’ is added the fee of 257.44 euros/MWh to the gas companies that must be paid by the consumers who benefit from the measure, the consumers of the regulated tariff (PVPC) or those who, despite the free market they have an indexed rate.
This spiral of high electricity prices that has occurred over the past week has been driven by natural gas price levels at maximum levels, mainly due to Gazprom’s announcement to cut from August 31 and pump gas to Germany for three days.
However, gas futures contracts on the Dutch TTF market fell by more than 17% at the start of the week to below EUR 280/MWh for September contracts.
Without the ‘Iberian exception mechanism’ to cap the price of gas for electricity generation, the price of electricity in Spain would average around €521.3/MWh, which is about €61.9/MWh more than with the customer compensation of the regulated rate, which will therefore pay on average 11.87% less.
Electricity market prices for this Tuesday in the rest of the European countries will also be particularly high. In the case of France it will therefore be more than EUR 740/MWh, while in Germany it will be more than EUR 660/MWh and in Belgium and the Netherlands it will be 622 and EUR 607/MWh respectively.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
