Spain And Portugal Reach Political Agreement With Brussels To Temporarily Limit Gas Prices To 50 €/MWh

energy prices impact on inflationEnergy prices impact on inflation

Spain and Portugal announced Tuesday that they have reached an agreement with the European Commission (EC) to limit the impact of gas in the formation of electricity market prices.

Spain and Portugal announced the agreement after holding a meeting in Brussels with the Vice-President of the European Commission responsible for Competition, Margethe Vestager, after the European Council approved in March an “Iberian exception” so that these two countries could prevent the contagion of the high cost of gas to the electricity bill.

According to the agreement reached with the Community Executive, the gas reference price will be set, initially, at around 40 euros/MWh and will mark an average price of 50 euros/MWh over the 12 months it is in force. This is 20 euros more than the ceiling of 30 euros initially proposed by Spain and Portugal.

These figures represent less than half of the current gas prices, which is quoted in Mibgas -the Iberian market- this Tuesday at almost 80 euros/MWh. So the ceiling that will be established for its use in electricity generation will lower the price of electricity to about 120-140 euros/MWh, compared to more than 200 euros/MWh in which the ‘pool’ is currently moving.

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