10.7% less than applying the measure
The average electricity price for regulated rate customers tied to the wholesale market has shown volatility as the Iberian exemption has taken effect. Data indicate that since the exemption began on June 15, this Wednesday saw a rise that reached a new high of 476.39 euros per megawatt hour (MWh). This figure reflects provisions from the Iberian Energy Market Operator, OMIE, and marks a significant step in energy pricing dynamics in the region.
Prices moved higher again, exceeding the previous peak recorded since the Iberian exception came into force. The latest reading stood at 459.4 euro per MWh, underscoring ongoing fluctuations in the wholesale market.
This Wednesday’s 476.39 euro per MWh represents the second highest price in the history of regulated rate customers linked to the wholesale market. Only the record of 544.98 euro per MWh, set on March 8 before the gas cap was enacted, surpassed it.
During the auction, the average price in the wholesale market, often referred to as the pool, is projected to be 187.3 euro per MWh for this Wednesday. The hourly peak is expected between 00:00 and 01:00 at 227.82 euro per MWh, while the daily low is anticipated between 16:00 and 17:00 at 156.25 euro per MWh.
With this pricing, the pool could reach 289.09 euro per MWh when compensation is added for gas companies and for PVPC consumers or those on indexed tariffs within the free market who must bear the cost of the measure.
Recent developments in natural gas prices have helped drive the rise in electricity costs over the past week. The market has faced pressure from announcements that gas supplies to Germany may be reduced for a period of three days starting August 31.
Engie, the French energy supplier, noted that Gazprom has reduced gas deliveries since Tuesday, reflecting ongoing tensions tied to contract implementations and the broader context of the war in Ukraine.
Gas futures in the Dutch TTF market also fell, with contracts for September trading below 260 euro per MWh, signaling some relief in the gas segment.
Another factor is the gas price for electricity generation in Spain as reported by Mibgas for August 31, standing at 230 euro per MWh compared with 80 euro on June 15 when the Iberian exception started. This indicates an overall increase of about 187.99% since the policy began.
In the absence of the Iberian exception mechanism that caps gas prices for power production, Spain’s electricity price could average around 533.46 euro per MWh. That would exceed compensation for regulated tariff customers by about 57.07 euro per MWh on average, a scenario that would imply an estimated 10.7% saving for customers under the measure.
Across Europe, electricity prices for the rest of the region are also high on the current Wednesday. For example, France could see prices exceeding 650 euro per MWh, Germany more than 600 euro per MWh, Belgium around 516 euro per MWh, the Netherlands near 534 euro per MWh, and Austria and Switzerland nearing 700 euro per MWh.
The Iberian mechanism, introduced by law on June 15, places a cap by limiting the gas price used for electricity generation to an average of 48.8 euro per MWh over a twelve-month window. This approach is designed to provide a buffer during the winter when energy costs typically rise.
The policy also outlines a staged pathway for natural gas, setting the price at 40 euro per MWh for generation in the first six months, with a planned monthly increase of five euro per MWh thereafter until the measure ends.
The government estimates that the Iberian exception has yielded substantial savings for Spanish consumers in its initial period, with a figure of around 1,383 million euros saved in the first two months. This represents roughly 22 million euros per day in avoided costs since the mechanism began. [Citation: OMIE and energy market reports]
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