The price of natural gas has started to fall after learning of the EU agreement limiting the price in the continental market
The Iberian cap on gas, activated since mid-June, has found an older brother, the European cap, which establishes a mechanism that limits the price of natural gas in the event of exponential increases. This tool has been successful in recent months in limiting the rise in electricity prices in Spain and Portugal, especially when costs are skyrocketing in the middle of summer. The question is whether now, with this new community agreement, the Iberian light will be positively influenced.
In reality, the European mechanism that limits the gas price to 180 euros/Mwh is a ceiling on the Dutch TTF, the index that is traded daily for this commodity and serves as a reference for the whole of Europe. The Community restriction effectively affects imports of natural gas regardless of its use. While the Iberian mechanism affects the price of gas used to produce electricity in combined cycle power plants. In other words, initially it will have no impact on the Spanish market, which is already governed by its own mechanism. Yes, it may have an impact if it is decided to extend the limit on the TTF to MibGas, because the formula of the mechanism takes the price of MibGas as a reference.
So far, Spaniards have saved 5,660 million euros on their electricity bills since the Iberian exception came into effect and until September 30. This is the conclusion of a study by Mibgas, responsible for the organized gas market in Spain and Portugal. In this analysis, it compares the cost of this question with respect to the PVB index that Mibgas sets for Spain and Portugal instead of the Dutch TTF, considered the reference indicator across the entire European continent. The latter has been much more volatile in recent months and set much higher prices, up to 800 euros per megawatt hour (MWh) on certain summer days compared to 300 euros/MWh reached in Spain.
Now we have to wait and see what the impact of the ceiling set at European level will be. At the moment, prices on the spot market are far from the fixed ceiling of 180 euros/Mwh. Although it is true that as soon as the community pact was known, the TTF price started to fall. This has been achieved with more than 7% to approximately 105 euros/Mwh. “So no direct effect”, sources in the sector indicate. “What is relevant is looking at how the markets and operators who trade daily in the organized market react from now on and whether or not there is a drop in trades and the market is ‘referring’ to OTC (direct trading),” those sources indicate. at .
The average price of electricity for regulated tariff customers connected to the wholesale market is down 19.46% this Tuesday compared to Monday, to EUR 75.19 per megawatt hour (MWh), marking the highest price since November 22 last. , when it amounted to 66.17 euros/MWh.
In the auction, the average price of light on the wholesale market for this Tuesday is 65.41 euros/MWh. For example, the maximum price will be registered between 7 and 8 p.m. at 107 euros/MWh, while the minimum of 4.11 euros/MWh will take place between 2 a.m. and 5 a.m. , says OMIE. To this ‘pool’ price is added the compensation to the gas companies to be paid by consumers beneficiaries of the measure, consumers of the regulated tariff (PVPC) or those who, despite being on the free market, have a have an indexed rate, which stands at 9.78 euros/MWh for this Tuesday.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
