The average price in the wholesale electricity market is expected to hold steady on Tuesday, effectively repeating Monday’s level and landing above 208 euros per megawatt hour (MWh).
For Tuesday, the pool price is set at 208.71 €/MWh, a touch below Monday’s 208.74 €/MWh, according to data published by the Iberian Energy Market Operator (OMIE).
The minimum price for today is projected between 176.22 €/MWh and the daily maximum could reach 237.95 €/MWh between 08:00 and 09:00 hours.
Compared with a year earlier, the average price for this Monday is about 252% higher than the 59.26 €/MWh recorded on 10 May 2021.
Pool prices influence the regulated rate known as PVPC, which serves roughly 11 million households and also provides a benchmark for the remaining 17 million consumers who purchase in the free market.
Statistically, the CNMC confirmed that in 2021 around 1.25 million people migrated from PVPC to a fixed-price free-market option, amid the ongoing energy price rise.
The APRIL bill is 53% higher than a year ago
Facua-Consumers in Action reports that the average electricity bill last April was 124.90 euros, the fifth highest figure on record and about 53.2% above the 81.55 euros invoiced in the same month a year earlier.
However, the April bill shows a 29.3% drop from March, when wholesale prices spiked above 283 €/MWh, marking a monthly peak in the market.
In April 2021, the price per kilowatt hour averaged 17.04 cents, with indirect taxes bringing the total to about 27.19%.
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The Iberia Exception
This Tuesday, the governments of Spain and Portugal reached an agreement with the European Commission to cap the gas price and establish an average of 50 €/MWh in the Iberian Peninsula wholesale market over the next twelve months.
The gas reference price is expected to start near 40 €/MWh and should average around 50 €/MWh for the next year, which is about 20 euros above the proposed 30-euro ceiling that Spain and Portugal had initially suggested.
Earlier, on 29 March, the government approved a national plan to mitigate Ukraine-related pressures, including extending electricity bill tax relief through 30 June and expanding the social electricity coupon to reach 1.9 million beneficiary households.
An early and extraordinary update to the renewable energy, cogeneration, and waste fee regime (Recore) also included an 1.8 billion euro cut in electricity charges.
The executive also extended the gas relief until 30 June, aiming to curb extraordinary profits in the electricity market by extending the coverage to energy futures and fixed-price contracts whenever the applicable price exceeds 67 €/MWh.
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Stability since stability
After the Russian invasion of Ukraine began on February 24, wholesale prices rose from 205.6 €/MWh and soared to a peak on March 8 at 544.98 €/MWh. Since March 12 the price has hovered around 250 €/MWh, then slipped below 230 €/MWh in recent days.
March was the most expensive month in history
March witnessed a sharp price run, with the wholesale market averaging around 283.30 €/MWh. By late winter, prices remained elevated, surpassing the December 2021 averages by a wide margin, marking it as one of the costliest months on record.
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Wholesalers have a direct impact on the PVPC, the regulator’s reference tariff that covers about 11 million consumers and informs the pricing for the remaining 17 million who buy in the free market.
The Ukraine-Russia conflict may push energy prices higher in the coming weeks, particularly for gas, as import flows to Europe face potential slowdowns from sanctions.
To cushion the impact on households, the government extended the electricity tax relief through 30 June.
Rising prices across Europe are driven in part by higher global energy costs and by the surge in gas prices used in combined-cycle plants, which interact with carbon dioxide emission rights to shape the hourly market price.
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In response to rising prices, the government kept the tax relief on electricity bills for the initial period, then noted that price dynamics reflect broader energy market trends and CO2 markets.
The ongoing conflict between Russia and Ukraine continues to influence European energy strategies, with gas imports to Europe potentially constrained by sanctions and other market dynamics.
2021 set a new record as the most expensive year for electricity
The year ended with notable pressure on prices due to the upward movement in the pool during the latter half of the year, resulting in high annual averages for wholesale electricity.
January’s daily averages reached about 201.72 €/MWh, a figure significantly higher than the same month a year earlier, though still lower than some late-2021 benchmarks.
The government extended the VAT reduction and electricity tax relief through April 30 to soften the impact on consumers. The temporary traffic light of policy included a drop in value-added tax and a reduced electricity tax to help households, while corporate production tax relief remained time-bound in March.