Spain and Portugal on June 15 Iberian exception, mechanism that imposes a limit on the price of gas used in electricity generation to lower the final price of electricity. If this cap, which aims to prevent the rest of electricity technologies from being affected by gas increases, was not implemented, the electricity market price would be 32% higher and according to the Government’s calculation, Thanks to the mechanism, Spanish consumers have already saved about 4,600 million euros.
This Iberian exception It envisions that gas and coal plants (and now some of the cogeneration plants) be charged for electricity based on the real natural gas price, with no cap on other generation technologies, and thus compensation for non-production. a loss. A compensation almost entirely paid by Spanish consumers, and to a much lesser extent financed by fees paid by electricity companies for using the interconnection to send electricity to France.
Total, Thermal power plants received a total of 6,560 million euros from this arrangement between June and December. Last year, according to data from OMIE, the operator of the wholesale electricity market (known as) swimming pool). A compensation that allows these facilities to operate by charging a fee at the real price of gas, while preventing other generation technologies that sell electricity in the wholesale market (renewable, nuclear, hydroelectric…) from charging the same price without incurring costs incurred from the increase in gas.
Of this total amount received by gas power plants, Spanish customers – those with regulated tariffs and some in the free market – paid 5,968 million via electricity bills euro in six months The remainder of the adjustment was paid at €592m between June and December (the figure rose to 619m by January 30th), along with some of the rates that electricity companies had to pay to use international interconnections. Electricity sales to France skyrocketed last year, and those congestion rents are being paid indirectly by French consumers.
From the day the mechanism came into effect, the extra cost of gas power plants began to be paid for by large consumers who purchase directly from the wholesale market and customers at a regulated rate. And gradually, this compensation was also taken over by free market clients when updating the terms of their rates when renewing or changing their contracts.
Complaint of the electric company
The big electricity companies admit that the mechanism designed by the Government serves to limit the price of electricity in the wholesale market, but they demand changes in its operation, mainly reforms about who will pay the additional cost of activating the ceiling. compensates for gas price and thermal power plants. Spain and Portugal asked for the mechanism to be extended. Iberian exception, It expires on May 31 and power companies want this extension to be used to implement these reforms.
The electricity sector condemns the implied distortion of the Iberian exception for the functioning of the retail electricity market, given that the millionaire cost of compensating gas plants is also paid by customers who enter into a rate agreement that entitles them to a fixed price. they have now become variable due to the additional cost imposed on them.
It is precisely this variable extra cost (depending on the price of gas and how much gas plants are used) by the big utilities to pass on to customers at tariffs that agree on a fixed price, which the big utilities are putting pressure on as an unaffordable trade distortion. When the government removes it..
The electricity sector is still clearly not wet with a clear proposition on who will bear the extra cost of gas power plants if consumers benefiting from the drop in market prices do not benefit, but they point out that they have in other European countries. It is considered that similar mechanisms will be put into use, and it is suggested that the excess cost can be transferred to the state budget or to the entire electricity system.
4,600 m net savings
For decades, European wholesale electricity markets operated with marginalist systems, until we await the major community regulation reform prepared by the European Commission; others. The last offer is, in most cases, the one made by gas power plants that boosted the rapidly rising international prices during the energy crisis, raising the price of all electricity. rising costs of natural gas.
This Iberian exception involves placing a maximum price on gas used to generate electricity (Average 48.8 Euros per MWh for one year) to lower the price of the electricity market as a whole, by ensuring that the price of gas does not affect the price of other generation technologies. However, the electricity produced by the plants continues to be paid at its real price so that they do not produce at a loss, thus receiving some form of compensation paid by customers who benefit from the general decline in the wholesale market price.
Spain and Portugal impose maximum prices on offers that only combined cycle power plants (that burn gas to produce electricity) can submit in the electricity market. With this, the electricity market as a whole decouples from the gas price and includes its price. According to government calculations, Spanish consumers benefited from net savings of 4,600 million euros due to the lowest market-determined price. thanks to the cap on gas, including the impact of 6,560 million transferred to gas and coal power plants as compensation.