The European Commission has given the green light to a Portuguese-Spanish proposal, also known as the “Iberian exception”, to cap gas prices on Monday, announced Portuguese Prime Minister António Costa, adding that both countries are working to pass national legislation on Tuesday.
Spain and Portugal announced at the end of April that they had reached a political agreement with the Commission to limit the price of gas, used by combined cycle power plants to produce electricity in the wholesale electricity market in both countries to reduce consumers’ bills.
“We are at this moment coordinating with the Spanish government how we approve the respective legislation, and we will do everything to be able to do it already tomorrow (10 May),” Costa added, quoted by Portuguese media, EURACTIV’s partner EFE reported.
The implementation of the price cap will last for twelve months and will start with an average gas price of €40 per megawatt-hour (MWh) to stabilise at around €50/MWh on average throughout the period.
The European Commission confirmed on 6 May that it had received the Iberian proposal and that it would study it “urgently” while “technical contacts” continued between Brussels, Madrid and Lisbon.
The price of electricity in the Iberian wholesale market rebounded on Monday by nearly 21% to €208.74/MWh, according to data from the Iberian Electricity Market Operator (OMIE), quoted by EFE.
In March, the European Council approved an “Iberian exception,” paving the way for both countries to take special measures and avoid the impact of extremely volatile gas prices on electricity bills.
Madrid and Lisbon obtained the exemption because both nations enjoy a high level of renewable energy production but suffer from a “very low” level of energy interconnections with the rest of the EU.
Spain is often described by many experts as an “energy island” compared to the rest of the EU.