21.6% less
The average electricity price for regulated-rate customers connected to the wholesale market shows a notable decline this week, reflecting the ongoing effect of Iberia’s price-limiting mechanism. Provisional data from the Iberian Energy Market Operator indicate that the price hovered around 385.85 € per megawatt hour (MWh) for the current period, marking a recovery trend that began last Saturday and continues through Friday. This figure comes after initial volatility caused by broader market movements and regulatory interventions intended to shield consumers from surging costs.
The price is a combined result: it equals the wholesale market auction average plus the compensation paid to combined-cycle plants under the Iberian exemption, a measure designed to cap gas-based electricity generation costs. As a consequence, the overall price level has moved back up from midweek declines but remains well below the peaks seen since the introduction of the exemption. Earlier in the week, it touched higher levels around 436.25 €/MWh on Tuesday and Wednesday, underscoring how the exemption helps moderate typical price swings in the gas-driven electricity sector.
At the wholesale market auction, commonly known as the pool, the average price for this Saturday was set at 160.04 € per MWh. The intra-day dynamics show the maximum price reaching 222.82 €/MWh between 22:00 and 23:00, while the daily minimum is expected to occur between 12:00 and 13:00 at roughly 127 € per MWh. These intraday variations highlight how demand patterns and generation mix influence hourly pricing, even within a regulated framework.
When the pool price is augmented by the compensation of 225.81 € per MWh granted to electricity consumers benefiting from the Iberian mechanism, the result affects those on the regulated rate (PVPC) as well as gas companies, albeit with distinctions in tax treatment and market exposure. In contrast, consumers on the free market follow indexed pricing structures that respond to different market signals and contractual terms. The interaction between pool prices and compensation creates a blended price path that helps stabilize consumer bills during periods of volatility, though it does add layers of complexity for market participants and policymakers alike.
The week’s price pressure also reflected broader gas-market dynamics, with natural gas prices pushing higher in response to supply constraints and geopolitical developments. A notable development occurred when Gazprom signaled potential reductions in gas flows to certain customers, an event that intensified price concerns in late August and fed into electricity cost expectations. This linkage underscores how electricity prices in Iberia and neighboring markets remain tightly connected to gas market fundamentals and policy instruments designed to cushion sharp fluctuations.
21.6% less
Without the Iberian exemption in place, the electricity price in Spain would likely have averaged around 492.18 € per MWh, a level roughly 106.33 € higher than the compensated price observed under the current regime. For regulated-rate customers, this translates into a meaningful reduction in average costs, effectively delivering about 21.6% lower prices compared with the scenario without the exemption. The mechanism’s impact on bills highlights how policy tools can dampen price spikes during peak demand or supply stress, providing predictable relief to households and small businesses alike.
The Iberian mechanism, introduced on 15 June, sets an objective for gas-based electricity generation by averaging a regulated price cap of 48.8 € per MWh over a 12-month horizon. The framework is designed to address the winter period when energy demand rises, and market competition can push prices higher. In practice, the arrangement defines a pathway for gas usage in electricity generation, starting with a base price and progressively adjusting by phased increments to reflect evolving market conditions. This structure aims to balance security of supply with affordability for consumers across both Spain and the broader Iberian region.
Officials estimate that the policy will yield substantial savings for consumers: about 1.383 billion euros in the first two months after its inception, a figure representing roughly 22 million euros saved every day for the broader economy since the mechanism began. These savings underscore the policy’s potential to mitigate price volatility and protect vulnerable households during periods of price stress while maintaining incentives for continued energy production from diversified sources. The balance between safeguarding affordability and ensuring reliable energy supply remains central to ongoing evaluations by authorities as energy markets evolve.