Bank of Spain lowers government expectations on impact of gas cap on inflation

In macroeconomic projections, the Bank of Spain is a price of the gas Between June 2022 and May 2023 between 70 and 80 euros per megawatt-hour (MWh), generation level gas (combined cycles and coal) “same” as the previous year, a generation volume impacted by demand (i.e. consumers) is 46% and increases by 4.9 points each month, and Price difference with France equal to the unit amount of the mechanism (which makes it possible to collect 300 million euros). so calculate Iberian mechanism It will reduce the electricity wholesale price by 30% and the price of the issued invoice (PVPC) by 17%. Considering that electricity carries an approximate weight 4% in the Harmonized Consumer Price Index (HICP) basket, the mechanism will subtract about 0.5 percentage points. 2022 average inflation rate.

Considering its effect on inflation, 2023, The effect is expected to be “somewhat”. positive“, about 0.1 percentage point because “the impact of the measure will be less and less throughout the process. first half of 2023“—From December, the limit price from 40 euro MWh was increased by 5 euro MWh per month until May—and because ” second half of 2023 Thanks to the measure implemented, electricity prices will be compared with lower price levels in the same period of 2022.

Even if the bank adds other possibilities development of prices, production with gas, volume affected by the limit and sales that could change sales to France. The influence of the Iberian mechanism average inflation. Therefore, if gas prices are higher (in line with the Dutch TTF, which is the reference market for Europe), the effect -0.7 percentage points in 2022. If the price difference between Spain and France was higher than expected, revenues 2,000 million euros, It will reduce the burden on consumers [el total que debe asumir España por la compensación del mecanismo es 6.300 millones, de los cuales 5.500 millones corresponderían a los clientes de luz y 800 millones a los ingresos por las ventas a Francia] and its impact on average inflation in 2022 will be around -0.6 percentage points.

Finally, if the affected generation is 20% higher than default in the baseline scenario – for example, a less renewable generation— the estimated impact will be around –0.4 percentage points in 2022; if the percentage peninsula demand By June he would have to pay for the costs of the mechanism (35% instead of the 46% considered in the baseline scenario), and the impact on average inflation would mean -0.4 percentage points.

In the case of government calculationsthe vice president didn’t explain what variables they were starting from, but European Commission Although forecasts of inflation are not included, calculations are emerging of how much the bill will be reduced, suggesting 15% for domestic customers and 18% to 20% for domestic customers. industrialists. To achieve these figures, the Manager starts at the electricity price of 96 euros MWh and sales to France of around 800m euros, while maintaining the same generation level (as in the previous active year) and affected generation volume. more demand from the Bank of Spain in the baseline scenario (the first 46% to rise to 100% at the end of the period).