The average electricity price for regulated customers linked to the wholesale market is set to decline by 5.5% this Friday, following a recent run of increases. Provisional data from the Iberian Energy Market Operator (OMIE), compiled by Europa Press, show a drop to 276.39 € per megawatt hour (MWh). This change occurs after several days of upward pressure on wholesale prices, and it marks a notable shift for households and businesses relying on regulated tariffs in both Spain and Portugal under the Iberian market framework.
Alongside this price movement, the new figure also influences the overall compensation structure that reflects the bids and payments within the wholesale market. Specifically, the price paid by demand to combined-cycle power plants incorporates the average auction price in the wholesale market, as part of the Iberian exception mechanism designed to moderate the cost of natural gas used for power generation. This mechanism interacts with regulated-rate consumers and those on indexed or hybrid rates, shaping what end users eventually pay on their bills.
At the auction, the wholesale pool price was recorded at 141.51 euro/MWh on Friday. Within the trading day, the price fluctuated, with the highest point reaching 161 euro/MWh during the first hour and the lowest point touching 119 euro/MWh between 19:00 and 20:00. These intraday variations reflect the dynamic balance between supply and demand in the Iberian energy market and illustrate how volatility can influence both spot prices and the overall compensation framework tied to gas-fired generation.
The pool price is combined with an additional compensation of 134.88 euro/MWh to gas companies. This combined figure translates into the charges or credits that consumers—whether they are on regulated rates (PVPC) or on indexed rates within the free market—see reflected in their bills. The integration of pool prices with compensation aims to cushion fluctuations in fuel costs while maintaining a measure of predictability for households and small businesses in a market known for its sensitivity to seasonal and geopolitical factors affecting gas availability and pricing.
Absent the Iberian exception mechanism, which acts as a cap to limit the gas price used for electricity generation, the average electricity price in Spain could rise to around 328.14 euro/MWh. That hypothetical scenario would imply an increase of roughly 52 €/MWh compared with current known values, potentially erasing much of the relief provided by compensation programs and increasing the burden on regulated-rate customers who would end up paying, on average, about 16% more. The Iberian framework therefore represents a crucial balance: it seeks to protect consumers from abrupt price shocks while ensuring that gas-fired power plants receive the incentives needed to maintain reliability during periods of higher energy demand.
The Iberian mechanism formally came into force on 15 June and sets a cap on the gas price used for electricity generation. It targets an average price of 48.8 euros per MWh over a rolling twelve-month window, a design intended to provide some insulation during the winter months when energy costs historically trend higher. This approach helps stabilize costs for residential and business consumers while supporting the reliability of supply across the Iberian Peninsula during periods of peak demand and price volatility.
In addition to the gas price controls, a special provision, often referred to as the Iberian exception, establishes a pathway for natural gas priced at around 40 euro/MWh for electricity generation. The plan envisions a monthly increase of approximately five euro/MWh during the initial six months, followed by adjustments through the remainder of the measure’s term. This staged approach is meant to gradually align incentives with market realities while providing a predictable trajectory for stakeholders as the energy system adapts to evolving fuel costs, technology deployments, and broader economic conditions.