The government approved an intervention in the electricity market this Friday. A price cap on gas used to generate electricity starts at 40 euros per megawatt hour for six months, with a gradual increase of 5 euros per megawatt hour each month, reaching 70 euros per megawatt hour. This makes wholesale electricity prices on the market notably lower, with the Vice President and Minister for Ecological Transition confirming a target price of around 130 euros per megawatt hour, well below the 200 euros per megawatt hour level seen in recent months. This is the stance of Teresa Ribera in her capacity as minister.
Who benefits: Regulated consumers
The main beneficiaries are about 10 million users in the regulated market, which accounts for roughly 37% of electricity consumers, along with 70% of large industrial users who source power from the wholesale market, often referred to as the pool.
Although Teresa Ribera is the minister for ecological transition, regulated-market customers will feel the impact as market participants adjust pricing contracts. The reference prices have fallen from about 210 euros when the wholesale market began in early 2022 to roughly 130 euros per megawatt hour, benefiting many users in the short to medium term.
How much: 30% discount
The price reduction will be significant for households on the PVPC rate (around 10 million domestic customers) and for 70% of industrial users that participate in the pool to secure their electricity. Estimates based on data from OMIE and the National Markets and Competition Commission (CNMC) indicate that in the first month of the cap at 40 euros, an average domestic PVPC customer could see about a 50% reduction on their March bill, compared with the record-high prices seen previously.
When: Starts in June
The measure is set to come into force the day after publication in the Official State Gazette (BOE). Ribera stated that, in principle, it would take effect this Saturday, but full implementation depends on formal approval by the European Commission. Officials suggest the EC approval could come within a week to ten days or two weeks.
Utility companies will have five working days to present details of contracts with customers, and seven more days to align systems. The measure will become effective only after the European Commission grants formal permission, according to ministry sources. If all goes smoothly, the earliest possible application could be in early June.
Who pays compensation: Consumers
The gap between the cap (40 euros per megawatt hour) and the actual gas price (around 80 euros) translates into a protective cushion for consumers, with roughly 10 million users in the regulated market set to benefit most as they renew contracts or secure supply within fixed-price or pool-based arrangements. Those in fixed-price contracts with durations under a year will also be included as they renew their tariffs.
Ribera argued that this is not a mere budgetary exercise. While some taxpayers will bear the cost, it is managed so that the state’s general budget is not overwhelmed by the kind of crisis seen in past financial shocks. Electricity companies will face reduced profits rather than losses, and the expected net benefit to consumers remains positive. If needed, the government retains the option to take further action, as ministry sources note.
In short, the measure shifts some burden away from households and businesses, aiming to stabilize electricity costs during a volatile period. The state anticipates that a careful balance will preserve steady supply while preventing the sharp price spikes that previously unsettled both homes and industry.
Notes: The numbers cited reflect official estimates from OMIE and CNMC and reflect the situation as discussed by the ministry. As with any price intervention, results depend on market reactions, weather, and generation mix across nuclear, hydro, and renewable sources. The overarching goal is to protect consumers whose bills are most sensitive to swings in wholesale gas and electricity prices while maintaining a reliable energy system for all sectors.