After having pleaded, for almost nine months, with Brussels for a ceiling, on the Iberian Peninsula, of the price of gas which enters into the energy mix and is used to set the price of all the electricity produced, Spain celebrates his victory. Following the preliminary agreement given on Monday May 9 by the European Commission, in a compliance letter, Madrid convened an extraordinary Council of Ministers on Friday May 13 in order to approve as soon as possible the complex legal mechanism which will allow it to limit the tariff per kilowatt/hour (kWh) to 50 euros on average for twelve months. Portugal was to do the same in stride.
The two countries are pleased to have obtained from Brussels the recognition of a “Iberian exception”on the grounds that its interconnections with the rest of Europe, via France, – 2.8% of its energy capacity – are very far from the 10% planned for 2020 and the 15% recommended by Brussels for 2030, and that the weight of renewable energies is particularly notable.
At the end of April, the Spanish and Portuguese governments had already welcomed the agreement in principle given by the Commissioner for Competition, Margrethe Vestager. “The European Commission has recognized the exceptionality defended by the President of the Spanish Government, Pedro Sanchez, and the Portuguese Prime Minister, Antonio Costa”, then declared the Spanish Minister for Ecological Transition, Teresa Ribera, considering that the Iberian Peninsula is “almost an energy island, which does not benefit from the internal electricity market due to its low level of interconnections”.
It only remained to fix a convincing mechanism, which does not suppose a covered help of the State. This will consist of compensating the gas companies, by paying them the difference between the cost of gas on the market and the ceiling set for the energy mix. An amount that will be borne by both the other electricity companies, which have obtained unexpected profits in recent months thanks to the record price of gas, and by consumers, who, despite their contribution, could see their bills drop. nearly 30% according to the estimates of the Spanish Minister.
Rising energy prices are the main driver of record inflation in Spain, – 9.8% in March, and another 8.4% in April
“We will socialize the costs and benefits, and take windfalls from the system, to bear the cost of the mechanism and the reduction of the market price”detailed the Portuguese Minister for the Environment, Duarte Cordeiro, on Wednesday April 11, recalling that the producers of hydraulic electricity “sell at a value much higher than the cost of production, because they sell at the price set by the gas”. He acknowledged that “the effect in Spain will be greater” than in Portugal.
You have 45.41% of this article left to read. The following is for subscribers only.