Wednesday, June 7, 2023

The government this Tuesday approves the extension of the Iberian exception that lowers the gas cap

Finally, the government approves the Royal Decree extending the Iberian Law of exception until December, which, according to sources in the region and sources confirmed by the government, approved Council of Ministers today Tuesday. The text includes a new reference price for the so-called gas cap starting in April, which will be more favorable for Spain and Portugal.

Brussels now limits the Irish cap on gas prices until December 2024 compared to Spain’s proposal

The details were closed this Monday afternoon in Brussels with the authority of the third president and minister for economic transition, Teresa Ribera, according to these sources.

It is estimated that the gas cap that will come into force in June 2022 will be at 60 coins per megawatt hour (MWH) this April, while in January of this year it began to rise at a rate of 5 coins/MWh per month, from 40 coins/MWh at the beginning The first six months of validity were established.

But, as it is said in the draft of the Royal Decree-Law Prepared by the Ministry for Economic Transition and to which had access, “a linear path is allowed from €55/MWh in March to €65/MWh in December 2023, with the same level of gas of the natural value which would have been reached in May, if the extension of the mechanism of Iberia had not been completed”.

In other words, the ceiling of €65/MWH is agreed by Spain and Portugal with the European Commission not next May, but at the end of 2023.

Gas control in recent weeks has indicated that this mechanism will not be repaired next month. But it should be known that the lower the gas cap, the greater the price differential that Spain achieves with respect to the EU in the event of a further increase in the price of raw materials.

With the draft text to which this medium had access, it indicates that “if the regulatory amendment is not approved by this royal decree, the reference price of natural gas for the month of April would be €60/MWH. However, with the proposed new regulation, this value will stand at €56.1/MWh , according to the new linear trajectory agreed with the European Commission until December 2023”.

“For this reason, this legislative change must take effect before the beginning of April, when otherwise there would be a regulatory jump and a disadvantage in the upper route that refers to the price of natural gas.”

“In order to comply with the consent of the Commission and for the natural trigger to apply the price of €56.1/MWh throughout the month of April, it is necessary that the said value be in force at the time of the daily market matching. April 1, that is, it must take place on March 31, 2023, because otherwise the previous event it could not be done safely,” the text continues.

The capture relies on “the adoption of the decision authorizing the extension by the European Commission in the coming days”. The decree will be presented this Tuesday after the Council of Ministers by the First Vice President and Minister of Economic Affairs Nadia Calviño, since this Tuesday Ribera will have to attend the Council of Energy Ministers of the EU which is held in Brussels.

progressive rise

Thus, the decision of the toilets established a progressive rise in the reference price of natural gas, which increased from 56.1 European coins in April to a rate of approximately 1.1 euros per month (except for August, when it increased by 1.2 euros. ).

Yes, and according to that draft, the gas cap will be at 57.2 euros/MWh in May, so that from the beginning of autumn, in October, at 62.8 euros/MWh, up to 65 coins already in December.

Sources in the sector of this threshold consider the threat of “great success” of the third president and the ministry for the economic transition in negotiations with Brussels. When he announced that he would request an extension of the gas cap, Ribera believed that this would be effective until the end of 2024, one more year than what he finally proposed to Madrid and Lisbon.

That objective, for the moment, will have to wait, waiting for what the reform of the electricity market, which will now begin to be negotiated on the 27th, after the irrigation proposal of Brussels and Spain will hopefully enjoy. European presidency in the second half of this year. The text proposed by Brussels, as Ribera said on Monday, “does not have many essential innovations to encourage price controls, but a good basis to work on”.

The text, to which this medium had access, indicates that the Irish solution “effectively contributes to the control of inflation, avoiding the increase in the price of electricity, which would otherwise occur, and the consequent contagion effect in the rest of the goods and services consumed.”, and figures savings obtained between June 15 and January 31 alone to 5,000 million cash “for all final electricity consumers, both domestic consumers and SMEs and industrial consumers benefit, and generate positive indirect effects in the rest of the electricity markets in the long term. which, as a whole, allows us to conclude the benefit and opportunity of its implementation “.

“Its effectiveness was even more at a time of stress in the energy market, when the prices of natural gas in all European countries pulled the prices of electricity to values ​​never observed before. For example, in August 2022 the average price of the daily market in Spain stood at €154.89/MWh, which also the price of the gas plant’s payment “represented a reduction of more than 18%” compared to what it would have had without the Iberia mechanism. /MWh, respectively,” recalls the text.

World Nation News Desk
World Nation News Desk
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