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Date Published: 26/04/2022
ARCHIVED - Spain reaches agreement with Brussels to limit gas prices to 50 euros per MWh
Spain and Portugal had originally asked the European Commission for a limit of 30 euros per MWh
The Minister for Ecological Transition and the Demographic Challenge, Teresa Ribera, announced on Tuesday April 26 that Spain and Portugal have reached an agreement with the European Commission to cap the price of gas in the wholesale market at 50 euros/MWh over the next 12 months.
While the reduction will go a long way to reducing the cost of electricity bills in Spain, it falls far short of the 30 euro cap the Spanish government was hoping for; instead, Brussels will allow a first limit of 40 euros for one year, which will mark an average rate of 50 euros during the 12 months that it is in force.
The Minister assured that the procedure will be approved in the coming days as the government is keen to “implement it immediately,” considering that gas prices are currently reaching 90 euros in the daily market.
Against all odds, the new pricing system, which finally decouples gas from electricity, looks likely to come into effect by May; it will have a huge impact on energy costs for the average consumer by reducing electricity to around 120-140 euros/MWh, compared to the more than 200 euros currently being charged.
“Our starting point was 30 euros in a complex process,” the Minister said, before acknowledging that the deal represents “a great agreement” that will limit the price of gas for the entire coming winter, which is more than the nine months originally proposed by Spain and Portugal.
In the last month or so, Germany and the Netherlands have been particularly vociferous against limiting the price of gas in Spain, and in recent days electricity companies such as Iberdrola have joined the fray, arguing strongly against the ‘Iberian exception’. On this, the Spanish ministers have yet to specify how they plan to organise the compensation that electricity producers will receive from natural gas.
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