The average electricity price for regulated rate customers tied to the wholesale market is set to rise again on Thursday. The jump is 16.96 percent higher than this Wednesday, reaching as much as €292.61 per megawatt hour MWh, according to provisional data from the Iberian Energy Market Operator OMIE and compiled by Europa Press.
As a result, PVPC customers will face the highest level seen since July 16 of last year when prices briefly surpassed 300 euro per MWh amid a heat wave.
The price movement reflects the sum of the wholesale market average auction price and the compensation paid to combined cycle power plants to apply the Iberian exemption that caps gas costs used for electricity generation.
In the auction the wholesale market price commonly referred to as the pool settled at €169.86 MWh on Thursday. The daily maximum trades at €180 per MWh in the first hour, while the minimum of €151.17 per MWh is projected for the 19:00 to 20:00 window.
To this pool price is added the compensation of €122.75 per MWh that must be paid to gas companies, although the beneficiaries include PVPC customers and taxpayers who enjoy the regime. In the free market the price remains indexed.
Gas price, maximum
These electricity price levels are being observed by Gazprom amid concerns about natural gas supplies across Europe and the demand reductions agreed at the European level.
The price of natural gas was posted on the Mibgas market this Wednesday at €134 per MWh. European natural gas futures traded on the Dutch TTF platform surged, rising around 11.5 percent to around €200 per MWh.
19 percent less than applying the average
Without the Iberian exemption mechanism that caps gas costs for electricity generation, Spain’s electricity price would average about €361.51 per MWh, roughly €69 per MWh more than the compensation paid to regulated rate customers. On average this would amount to about a 19 percent higher cost for PVPC customers.
The Iberian mechanism, which began on 15 June, limits the gas price used for electricity generation to an average of €48.8 per MWh over a twelve month period, providing relief during the coming winter when energy costs tend to rise.
Specifically, the Iberian exemption sets a price path for natural gas used to generate electricity: €40 per MWh for the first six months, followed by an increase of €5 per MWh each month through the duration of the measure.