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Tuesday, May 24, 2022
HomeLatest NewsSanchez launches Brussels to beat gas at €50/MWh, far from his goal

Sanchez launches Brussels to beat gas at €50/MWh, far from his goal

White smoke in Brussels. The government has reached an agreement with the European Commission to be able to cap gas at 50 EUR/MWh and thus partially reduce the electricity bill. The agreed decision is far from the original proposal by Pedro Sanchez and Teresa Ribera., which sought to set a limit of 30 euros/MWh, which would mean the possibility of reducing the electricity bill for consumers covered by the regulated tariff by almost half. Finally, Spain and Portugal may introduce an intermediate ceiling. The pressure from the electric companies was significant.

That was not easy. And the final decision after a month of waiting is not as ambitious as the aspirations of the Spanish government. Sanchez and Ribera trusted this measure to control price increases. It remains to be seen how this decision will be implemented at the next Council of Ministers and, therefore, implications for inflation.

At the first moment Spain and Portugal will be able to cap the price of gas at 40 euros/MWh., which will help reduce the high inflation of these months. In March, it was 9.8%, a similar figure is expected in April. This limit will then be extended until it reaches 50 EUR/MWh on average. With this limit, the electricity bill will be around 110-120 EUR/MWh. It currently exceeds 200 EUR/MWh.

The Commission demanded that the Iberian countries – although Portugal stood out in the final stages of the negotiations, as it did not put so much at stake – confirm dual auction system to prevent the rest of the EU from buying subsidized energy. This was one of the main fears of Brussels. Thus, the sale agreements between the countries will not be changed, and the restriction will affect the energy of the Iberian Peninsula.

Moncloa has been privately considering a €50/MWh gas cap since the beginning, despite always protecting €30/MWh initially. If Spaniards covered by a regulated account end up paying around €110 per MWh on the bill, which remains to be seen, they will pay twice what they have paid in the last ten years.

In the negotiations, which were tough to the very end, the electricity companies played a leading role in the form of pressure on the European Commission. Ignacio Galan He spoke publicly about it a week ago. The President of Iberdrola has criticized the plan that Pedro Sánchez is defending before the community authorities and pointed out that the “way” to bring down the price of electricity in Spain” is to change the Regulated Electricity Tariff (PVPC) that exists in Spain and apply the Portuguese Formula C to that. according to him, the bill can be reduced by 30-40%.

called “pool”The Spanish electricity price appeals body has also been heavily criticized by the government in recent days. It brings together the entire sector: manufacturers, marketers, retailers… In other words, its role goes beyond Endesa, Iberdrola, Naturgy and Acciona. There are financial institutions such as Santander or BBVA; also participates in negotiations. Or investment banks that are engaged in attracting interested parties. Capricorn, in general, feels represented in this group. An organization of a technical nature that rarely positions itself at the political level, as employers in banking or the electric power industry do. What he insists on Sanchez’s electricity plan was

Also involved in this pressure campaign Autorité da Concorrência (AdC), Portuguese Competition Authority. According to sources close to the Portuguese regulator, the AdC strongly opposes the idea of ​​intervening in the price of gas offers, and this has been repeatedly stated by the Agency for Cooperation of Energy Regulators (ACER), which brings together member state industry regulators.


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