Spain and Portugal will launch a special mechanism this Tuesday to put a maximum price on gas used to generate electricity in order to lower the electricity bills of millions of domestic and industrial customers.
After obtaining final approval from the European Commission, Iberian governments will set up the new system. reduce electricity bill between 15% and 20% the ratio of those whose price depends on how the wholesale electricity market develops. That is, 10 million households with a regulated rate and 70% of industrial customers going to the market to buy the electricity they need. The cap on gas will lower the price of the electricity market and with it the electricity bills of these millions of customers.
At the same time, the Government will maintain the system created throughout the summer to prevent the contracts signed by electricity companies to sell their energy outside the wholesale market from being inflated and bring extraordinary profits due to the energy crisis. Management It will also include cuts by utility companies against unexpected profits. in a three-month extension By September 30, most of the measures of the anti-crisis macro-decree for the war in Ukraine, which it plans to approve in the coming weeks.
The executive took advantage of the macro decree against the impact of the war to expand the scope of cuts to electricity companies to avoid the possible extraordinary benefits that the rise in energy prices could cause. And now pretend maintain this surveillance system throughout the summer to avoid large increases in light in the signing of new contracts by electricity companies, as confirmed by Ministry of Ecological Transition, It was commanded by Vice President Teresa Ribera.
Amid the price chaos since last March, the manager will continue the system of reducing the extra revenue some companies are generating. includes all contracts signed at high prices (over 67 Euros per megawatt hour, MWh). A price ceiling that will remain at this level throughout the summer, meaning that revenue from contracts above this maximum must be returned to the electricity system.
The government had warned utilities that it would extend the validity of the cuts again after the summer if the energy crisis continued and there were still doubts about the companies’ pricing strategies. In an interview with La Vanguardia, Vice President Ribera confirmed that this will be the case and that the cap will remain. “Although companies are reviewing prices upwards, they are careful not to exceed 67 euros per MWh. (…) If we had not established this reference of protection against rising prices, we would probably have realized that the utilities would have offered much higher prices in these contract reviews,” Ribera explained. “This container, which we plan to extend while the current conditions continue,acts as a very powerful incentive to contain price increases”.
In parallel, Yolanda Díaz, Vice President and Minister of Labor, announced this Monday that she is negotiating with the socialist part of the government to include an extraordinary tax on electricity and oil companies in the new decree drafting anti-crisis measures. through the application of a special and temporary surcharge to the corporate tax for energy groups.
beware of electricians
Last September, the Government devised a system that compelled some of its nuclear, hydroelectric and renewable energy sources to give back the supposedly extraordinary income they had earned by selling their electricity at the wholesale market’s exorbitant prices (increased in prices due to the rise in gas prices). and CO2 emission rights, costs that these technologies do not incur). Some extra benefits that power companies deny and emphasize that they sell all their production in bilateral contracts at prices well below the wholesale market.
In March, the Government macro decree All new contracts signed by companies from now on, as well as revisions or updates to contracts currently signed, provided that the electricity supply price exceeds 67 Euros per MWh. Above this limit, which the government considers a reasonable price (because a gas price of 20 Euros per MWh is used as a reference), companies will be penalized and have to refund the surcharge based on what they have internalized. This skyrocketing price of gas for which they do not support the cost in their operations.
In March, the Ministry also created a special oversight system to ensure that large utilities don’t hide what’s known as “heavenly benefits” throughout the chain of contracts to ensure they pass inflated prices to the end customer. Large electrical groups (I singularlyBerdrola, Endesa, Naturgy, EDP or Repsol) sell most of the electricity they produce directly to their own marketers, to companies integrated into their business groups. The government has decided to put a special focus on such intragroup contracts and monitors the final price that marketers pass to the consumer as a measure that will be extended over the summer.