Electricity prices in the wholesale market show a sharp rise on Christmas Eve
The average price for regulated rate customers connected to the wholesale market rose dramatically this Sunday, December 24, reaching 69.17 euros per megawatt hour MWh after a 48.3 percent increase based on Saturday data. This surge reflects the heightened demand and market dynamics surrounding the holiday period.
Provisional data from the Iberian Energy Market Operator OMIE indicate a price peak of 109.30 euros per MWh as Christmas Eve approaches, with furnaces warming and kitchens preparing holiday meals. The price dipped briefly to a minimum of 46.99 euros per MWh between 19:00 and 21:00, and a similar minimum was observed between 15:00 and 16:00. These fluctuations illustrate the typical intraday volatility seen in the Iberian pool during peak seasonal activity.
Compared with the previous year, the price on Christmas Eve appears nearly double. The average price for that day last year stood at 36.32 euros per MWh, underscoring the significant rise in wholesale electricity costs during the holiday period.
Looking at December as a whole, the average price of the electricity pool stands at 70.88 euros per MWh, while December 2022 concluded with an average of 112.57 euros per MWh. This suggests some stabilization relative to last year, though seasonality and market forces continue to push prices higher on peak days.
Gas pricing and the Iberian mechanism
The compensation paid to gas suppliers is added to the pool price paid by consumers who benefit from the regulated tariff PVPC or those in the regulated rate bracket. Even for consumers tied to the regulated tariff but with some exposure to the free market, the price has remained at zero euro per MWh since February. This circumstance has persisted over several months and forms part of the broader Iberian price policy.
The Iberian exception, a temporary measure, was extended through December 31 following an agreement between Spain, Portugal, and the European Commission. This extension alters the timing of the price reference and has prompted adjustments to keep the mechanism workable as market conditions evolve. The reference price in the original contract rose gradually, reaching 65 euro per MWh after a history of incremental increases, and the latest figures reflect ongoing recalibration to balance affordability with wholesale risk.
At present, the mechanism has not caused major disruptions to marginal matching in wholesale markets since late February. A potential extension remains possible if necessary, ensuring a price that remains somewhat insulated from rapid natural gas price swings while still reflecting market fundamentals.
Anticipated sunset of the Iberian mechanism
Toward year-end, the Iberian mechanism is expected to wind down after considering the European Commission’s assessment that its implementation is not feasible beyond the agreed period. The extension initially slated to last through December 31 requires an approval process from the Directorate-General for Competition of the European Commission, with officials indicating that post-year-end, the mechanism cannot be put into practice. This development was discussed in the wake of a meeting of European Energy Ministers.
Proponents note that prices have stabilized and sit below the levels observed at the end of the previous year, when the extraordinary price control tool first came into effect. This context suggests a normalization of some price dynamics, even as the broader energy market remains sensitive to supply conditions and regulatory interventions.