The electricity price cap mechanism, granted by Brussels to Spain and Portugal and called the “Iberian exception”, has been extended until the end of the year, the Spanish government announced on Tuesday.
“Spain, Portugal and the European Commission have agreed to extend” this system, which was to end at the end of May, “for seven more months”, that is, until the end of December, Pedro Sánchez’s executive indicated in a statement. .
In a context of rising prices, Madrid and Lisbon obtained the go-ahead from Brussels in June 2022 to exit the European tariff system due to their lack of interconnection with the rest of the European Union, which penalizes their consumers.
This derogatory regime, which allows in practice to limit the price of gas used in the production of electricity, has allowed savings of close to 5,000 million euros, according to the Spanish Government. However, the device activation threshold, which is currently €55 per MWh, will be raised to €65 in December.
Ways to reform the system.
The price of electricity is set in the European markets by the principle of “marginal cost”, which implies taking as a reference the price of the last production capacity used to balance the network, that is, currently gas power plants.
Accusing this system of increasing prices, several countries want to reform it, such as Spain, but also France and Italy.
Other states, such as Austria and the Netherlands, prefer to have free competition or a reinforcement of network interconnections on the continent to lower prices.
Two weeks ago, the European Commission proposed ways to reform the European electricity market without fundamentally restructuring it, using long-term power contracts for low-carbon energy to shield consumers from price volatility and encourage investment in renewables and nuclear.
Source: BFM TV
