Spain and Portugal limit gas prices to reduce household electricity bills

Spain and Portugal limit gas prices to reduce household electricity bills

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On March 24 and 25, during a European summit, Spain and Portugal had expressed the need to put a cap on the price of gas, to face the fluctuations in international energy prices. Today it is official, Madrid and Lisbon have approved the limitation of the price of gas to reduce the electricity bill.

With our correspondent in Madrid, Francois Musseau

The Pedro Sánchez government hopes that this will reassure the population and allow predictability in the face of the situation in the world.

Capping the price of gas at 40 euros per megawatt, and then gradually to 50 euros per megawatt, is the lever with which the Spanish Government has wanted to put an end to the terrible social anger that had begun with that of freight carriers and that little by little it spread to the whole society” Reassure, reassure the population “Insisted the head of government Pedro Sánchez.

In practice, this price cap directly affects the price of electricity, because it is the gas that produces electricity. On average, according to official calculations, the cost should fall by 40% in the near future. This is considerable, and more specifically 30% for this large proportion of Spanish individuals and Spanish companies, which are subject to regulated rates subject to the ups and downs of the sector.

A measure that directly benefits individuals

For the Minister for the Ecological Transition, Teresa Ribera, this is an unprecedented measure, because, for the first time, it directly benefits the people and households affected by the rise in energy prices, and it is done to the detriment of the large electric groups

It remains to obtain the approval of the European Commission so that, Madrid hopes, the measure will come into force as of June.

Spain and Portugal leave the European system

Spain and Portugal had reached an agreement with the European Commission at the end of April in Brussels to lower the price of electricity in the Iberian Peninsula, under a derogatory regime that allowed them to decouple it from gas.

The cost of energy has risen sharply in recent months in Spain and Portugal due to the rules of the European electricity market, which force producers to sell their energy at the price of the most expensive technology -c’, that is to say currently that of gas stations

Madrid and Lisbon fought against this system, considered inadequate for the energy reality of the Iberian Peninsula.

This mechanism has a duration of 12 months and will set an initial limit of 40 euros per megawatt-hour on the price of gas used in electricity production, with an average target of 50 euros over the next 12 months. Natural gas prices on the wholesale market are currently around 90 euros per megawatt-hour.

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