Green light”Iberian exception” negotiated by Spain and Portugal to set an upper limit on the gas price, which allows to lower the electricity bill. After more than two months of deliberation and three weeks after it was approved by the Cabinet, the Community Executive approved the permitting measure this Wednesday.government Pedro Sanchez set a cap of 48.8 euros per megawatt hour (MWh) on average for almost a year. As announced in a statement by Brussels, the total cost of the subsidy €8.4 billion: 6,300 million for Spain and 2,100 million for Portugal.
The implementation period of the measure will be approximately one year, Until 31 May 2023. to be paid in the form of aid direct subsidies to electricity producers to finance some of the cost of the fuel they use. The daily payment will be calculated as the price difference between the market price of natural gas and the market price. The maximum limit to the gas price set at an average of 48.8 Euro MWh during the precautionary period.
Special, In the first six months of implementation of the measure, the effective price limit will be set at 40 euro/MWh.. From the seventh month, this limit will increase by 5 euros per monthwill lead price limit of 70 euro/MWh in the twelfth month. The subsidy, as explained by the Community Manager, To be financed by so-called “clogging rents”acquired by the Spanish transmission network operator as a result of cross-border electricity trade between France and Spain, and a fee charged by Spain and Portugal to recipients of the measure..
The price of electricity in the wholesale market will drop significantly to 130 euros per megawatt hourWell below 200 euros per megawatt-hour installed in recent months, with a reduction in consumer bills predicted by the Spanish Executive between 15% and 20%.
Scope of reforms
“The interim measure we approved will allow Spain and Portugal to lower electricity prices for the benefit of consumers who have been severely affected by the rise in electricity prices as a result of Russia’s invasion of Ukraine,” the Vice President said. margrethe vestagerThe measure will preserve the integrity of the single market and It will give Lisbon and Madrid a “fixed time” to accept the reforms Increasing the future resilience of the electricity system, in line with the goals of the European Green Deal, which will further reduce the “effects of the energy crisis on final consumers”.
According to the Commission’s analysis, the plan includes the end-March communiqué on both security of supply and affordable energy prices and Council of Europe 24 and 25 March Sánchez and his Portuguese counterpart, Antonio Costa, managed to initiate the so-called “Iberian exception”, given the low level of connectivity with the rest of the European continent and the high share of renewable energy.
Adequate, necessary and proportionate
The Community Executive evaluated the measure in line with EU state aid rules, which allow member states to provide assistance to certain companies or sectors to address a serious disturbance in the economy. In the case of the Iberian scheme, the conclusion is that the measure complies with state aid rules “due to the special conditions of the Iberian wholesale electricity market”. Specifically, limited interconnection capacity It is the high consumer exposure to wholesale electricity prices and the high influence of gas in setting electricity prices, causing a particularly serious disturbance in the Spanish and Portuguese economies.
For all these reasons, Brussels concludes that the measure is: “sufficient, necessary and proportionate” and “will lower wholesale electricity prices in favor of consumers without affecting commercial conditions contrary to the common interest.” Contest services also consider that the plan does not go beyond what is necessary to face the extraordinarily high electricity prices in the Iberian Peninsula, which is temporary in nature as it will only be valid until 31 May 2023, which minimizes it. It distorts competition and prevents possible negative effects on the functioning of spot and forward electricity markets. Moreover, It will not lead to cross-border restrictions on trade or discrimination between Iberian and non-Iberian consumers..