Spain spent three months in a row, with the so-called Iberian exception; gas price It is used to generate electricity to lower it. final price of light. The cap aims to ensure that the rest of the power generation technologies are not affected by gas price increases. What is happening is that currently the price of Mibgas on the Iberian gas market is below the limit set by the mechanism and therefore has not been implemented since February 26.
This Iberian solution (the new name that the Pedro Sánchez Government is trying to popularize) is considering a payment. compensation to gas and coal power plants and some of the cogeneration companies to charge electricity at the real price of natural gas with no cap on other generation technologies, thus avoiding wasted generation.
The compensation that Spanish customers have paid almost all of since the gas ceiling came into effect, and to a much lesser extent, is financed by the rates paid by electricity companies to use the interconnection to send electricity to France (and ultimately, French electricity consumers pay). aspect gas market price If it is below the specified limit, the cost of this adjustment is zero.is not valid and has no effect on customers’ final invoice.
“The non-enforcement of the law is a good sign. Iberian exceptionIt is an indication that the gas price is below the upper limit of the mechanism and that it has competitive prices, and that the electricity prices are low without the need for an upper limit.” Juan Antonio Martínez, analyst at specialist consulting firm Grupo ASE. After breaking record after record in the worst of the crisis, energy prices are finally moderating.
far from the highest price
The maximum price applied to gas used in electricity generation is increasing every month. Currently, in May, this ceiling is 57.2 euros per megawatt hour (MWh), but the Spanish gas market price is around 27 euros. The wholesale market price has been consistently below the maximum allowed since February 27. HE Iberian exception Loss of impact from the drop in the price of gasoline had been sporadic in previous months (even a few weeks when customers went out to return), but never this long.
The European Commission has given permission to extend the Iberian mechanism in Spain and Portugal until the end of this year, creating a monthly increase path in the gas price cap until it reaches 65 euros per MWh in December. Considering the current level of gas prices in the market and the expectations of investors from the energy sector, it seems likely that this will remain below the fixed ceiling permanently and the Iberian exception will not be applied again.
No effect all year?
“It’s not impossible for gas prices to increase by the end of the year, but difficult to reuse Iberian exception”, pay attention to official sources connected with the functioning of the mechanism. “We are in the middle of a war and there may be upheavals again pressing the markets and we will have to see how severe the drought is during the summer months and whether gas plants will be used extensively again. But for now, futures markets predict that the gas price will remain below the ceiling until the end of the year and even in 2024.”
This futures markets – Electric and traders it buys and sells electricity with delivery within a given period of time and serves to forecast prices the industry expects weeks and months ahead – reflecting and predicting that investors expect the gas price to be between 27 and 29 euros per MWh during the summer months and will rise to 44 euros in the last months of the year. always below the limit set by Iberian exceptionwill deactivate until the scheduled completion date.
“It’s not clear that the price of gasoline will stay this low throughout the year,” argues Grupo ASE’s Martínez. “The gas market may continue to be subject to extraordinary volatility. An increase in gas demand in Asian countries or Europe itself and some problems in global LNG supply [gas natural licuado, el que se transporta por barco] they can upset the fragile balance of the inelastic market. Any of these risks could put pressure on prices again,” he warns.
When the ‘Iberian exception’ returns
The Iberian exemption was introduced in Spain and Portugal on June 15, at a time when gas prices skyrocketed and affected electricity prices. During the first seven months, the majority of Spanish consumers pay a surcharge to your bills to finance the adjustment to compensate gas mills, but for several weeks the adjustment did not cost extra, but meant a refund for consumers.
Due to the decrease in natural gas prices, less use of thermal power plants and the continuation of intensive electricity exports to France, Spanish customers were refunded 1000 TL for four days in December, 16 days in January and 18 days in February. part of the cost. And it is because the rates for sales to France are higher than any compensation payable to the gas power plants—first in February—and is reflected in the payments to the customer on their invoices (about 34 euro cents for the average consumer).
Effect on electricity bill
According to the records of OMIE, the operator of the wholesale electricity market, from June of last year to April of this year, thermal power plants received a total of 6 billion 641 million Euros from these compensations. swimming pool. This compensation is used to make these power plants operate at the real price of natural gas, while preventing other generation technologies that sell electricity in the wholesale market (renewable, nuclear, hydroelectric…) from charging the same price without incurring costs. from rising gas and thus avoiding possible exceptional benefits.
Of this total amount received by the gas power plants, Spanish customers, some of whom have PVPC regulated tariffs and free market contracts, paid 5,993 million euros through electricity bills between June and April. According to OMIE data, 20.6 million euros were returned to Spanish electricity consumers in February and no payments were made in March, April and also in May so far.
The remainder of the regulation on charging thermal power plants is paid, along with a portion of the congestion rents (the rates that electricity companies must pay to use international interconnections), with 667m euros between June and February. Since last year, electricity sales to France have skyrocketed, and the balance of interconnections has always been an exporter to Spain, so these congestion rents have been indirectly paid by French consumers. With the inactive Iberian exception, none of the congestion revenues in March, April and May was used to finance the adjustment.
According to the calculations of the Ministry of Ecological Transition, led by Teresa Ribera, Spanish consumers, net savings of around 5,200 million euros Due to the lower price set by the market thanks to the cap on gas, including the impact of more than 6,600 million transferred to gas and coal plants as compensation.