The vice-president, Teresa Ribera, will meet with the Portuguese authorities this month to consider the proposal, given what they consider to be the proper functioning of the mechanism limiting the increase in electricity production
There are still five months before the Iberian limit expires and both Spain and Portugal are already studying how to extend this mechanism that limits the price of natural gas used to produce electricity in both countries. To achieve this, the two governments must submit a new proposal to the European Commission, the body that has the final say in authorizing the exceptional pricing system after May 31 this year, the date it was authorized to apply it. to fit. the increase in energy prices last year.
This is confirmed to this newspaper by sources from the Ministry of Ecological Transition, the head of which, Vice President Teresa Ribera, is willing to lead the struggle in Brussels to expand the Iberian mechanism. A meeting between Spain and Portugal will take place in the coming weeks “to assess the specific approach to be followed” before the EU applies for the extension.
The decision is complex, as is the time it took Spain and Portugal for the rest of the European partners to accept their request in the spring of last year. Both countries claimed that the Iberian Peninsula had been virtually disconnected from the rest of the continent to deal with this exceptional measure that has prevented a further rise in electricity prices since June 15.
When Spain drew up this winter’s energy contingency plan (known as Plan +SE), the executive was counting on an extension beyond the month of May 2023. Last December, Vice President Ribera and Portuguese Prime Minister Antonio Costa met to decide to meet in January. come and see how the extension was proposed to the Commission, arguments, context and in what terms.
The Iberian cap is the mechanism approved by the EU so that the price of natural gas used as a reference by the electricity markets of Spain and Portugal to produce electricity is between 40 and 50 euros/Mwh from June last year to May this year . . This reference is much lower than the real costs of natural gas in the market (the Dutch TTF sets the standard daily), with costs exceeding 300 euros/Mwh last summer.
For example, the average price of electricity for customers with a regulated tariff connected to the wholesale market was 211.9 euros/Mwh until 15 June (before the entry into force of the gas cap), while in the rest of the year (taking into account the calculation with this exceptional mechanism) the average price was 208.36 euros/MWh. In this sense, if it were not for this measure, the average price of electricity between June 15 and December 31, 2022 would have been 256 euros/MWh, or 23% higher than that of the paying consumer.
With these bills on the table, Spain and Portugal insist that this measure must and can be extended, which has at least two major side effects. On the one hand, the difference between the price paid for the mechanism (up to 50 euros/Mwh) and the actual price (more than 300 euros/Mwh on some August days, for example) is paid by all consumers (regulated market and free market) via a fee that is settled in the invoices at the end of the months. On the other hand, since Iberian natural gas is cheaper than in the rest of the EU, France has taken advantage of this to maximize the demand for electricity as it is cheaper on this side than on the other side of the Pyrenees.
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.
