The average electricity price for regulated rate customers connected to the wholesale market is projected to fall by 6.8% this Tuesday, dropping to as low as €238.88 per megawatt hour (MWh), according to provisional data from the Iberian Energy Market Operator (OMIE) and reported by Europa Press.
Consequently, PVPC customers should see prices dip below the €250 per MWh threshold that has been breached in the preceding three days. This movement reflects the broader dynamics of the Iberian electricity market and the ongoing compensation framework tied to gas-fired generation.
As a result of this price signal, the bid price in the wholesale market will be augmented by the average auction price with an additional compensation to gas-fired plants as part of the Iberian mechanism intended to temper electricity costs for consumers. This mechanism operates within the context of the Iberian exception designed to cap gas costs used for power generation.
During the auction, the average wholesale price, often referred to as the pool, is forecast to be €145.65 per MWh on Tuesday. The intraday variation shows a maximum of €165 per MWh between 22:00 and 23:00, and a daily minimum of €125.10 per MWh from 03:00 to 05:00.
Overlaid on this pool price is a €93.23 per MWh compensation payable to natural gas power generators, a cost that is ultimately reflected in the charges borne by consumers who benefit from the regulated PVPC or those with indexed rates while in the free market.
In the absence of the Iberian mechanism, commonly referred to as the Iberian exception, the price of electricity in Spain would be approximately €283 per MWh on average. This would translate to roughly €44 per MWh more than the current compensation framework, resulting in an average increase of around 15% for PVPC customers who are subject to this regime.
The Iberian mechanism, which took effect on 15 June, establishes a cap on the gas price used for electricity generation, setting an average of €48.8 per MWh over a twelve-month horizon. This cap is designed to provide relief during the winter months when energy costs tend to rise and volatility tends to increase. It anchors the financial support around a stable reference that can dampen spikes in wholesale prices that would otherwise feed through to consumers.
Specifically, the Iberian exception sets a route for natural gas used in electricity generation at an initial price of around €40 per MWh, with an expected monthly increase of €5 per MWh during the first six months and then stabilization through the remainder of the measure’s term. This structure is intended to balance affordability for households with the need to maintain reliable electricity production as energy markets respond to seasonal demand and supply pressures.