Sunday, July 3

The price of electricity finally falls for the beneficiaries of the gas cap and is reduced by 20.4% this Saturday

The price of electricity for clients covered by the regulated rate, the voluntary price for small consumers (PVPC), will finally fall this Saturday, a day of less demand and in the final stretch of the heat wave. It is the first fall after the entry into force on Tuesday of the Iberian solution, of which this group of users are the main beneficiaries.

The cap on gas opens with a lower fall than that estimated by the Government

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With the gas price on the rise again, customers in PVPC will pay this Saturday (a day with less electricity consumption due to the reduction in industrial activity) 212.02 euros per megawatt hour (MWh) for energy. It is 20.4% less compared to Friday, according to data from the Iberian Electricity Market Operator (OMIE).

That price already includes the compensation that must be paid to the combined cycle plants for the gas cap: the difference between their real price and the limit of 40 euros/MWh that has been implemented to prevent their price from contaminating market prices. wholesaler. That compensation is going to be reduced this Saturday for the first time since this mechanism was launched. It will stand at 65.48 euros/MWh, 26% less than on Friday.

That payment is added to the price of the wholesale market, which on average this Saturday also falls. It does 17.6%, up to 146.54 euros, the lowest level since April. Although it is still higher than the 130-140 euros/MWh to which the Government estimated that the pool would fall when announcing the measure, it is a much lower price than those registered for this Saturday in other European markets: a figure “very far from €280/MWh in France, €195/MWh in Germany or €295/MWh in Italy”, highlights the Ministry for Ecological Transition.

Teresa Ribera’s department stresses that, without the mechanism, “whose correct application is being supervised by the CNMC, prices in Spain would have risen to around €280/MWh”, for which it has allowed a 24% cut, compensation included, which is the highest ever recorded. This “shows its effectiveness in reducing the price of electricity, limiting windfall profits for electricity companies and acting as a ‘firewall’ against high gas prices.”

In the case of the Iberian gas market reference, Mibgas, the price for this Saturday that is used to calculate the compensation for the cycles stands at 109.67 euros/MWh, 2.5% more than on Friday.

The ministry highlights that the futures markets “clearly reflect” the effect of the mechanism for the coming months; for the fourth quarter of 2022, “agents can already buy electricity in the Iberian Peninsula at €160/MWh, while in France the price rises to €578/MWh and in Germany to €324/MWh”.

“The biggest difference occurs in November and December; in this last month, in the Iberian Peninsula the reference price is €165/MWh, while in France it amounts to €668/MWh and in Germany to €338/MWh”.

“This great difference in prices between the Iberian wholesale market and the others benefits all Spanish and Portuguese consumers, both those with contracts indexed to the market and those with contracts at fixed prices, because they take market prices as reference”.

The Iberian solution entered into force in the electricity auction on Tuesday with savings for consumers well below what the Government had anticipated. Experts recall that the mechanism has started in the most adverse possible context: in the worst heat wave for a month of June in 20 years.

The high temperatures of recent days and the increased demand have triggered the generation of electricity with combined cycles to record highs. And the intensive use of these plants has also forced the use of plants with less efficiency, which in turn raises the cost of compensation to the cycles.

Thus, last Thursday the demand for natural gas for electricity generation reached 770 gigawatt hours (GWh), registering a new historical record, second in a row, by exceeding the 764 GWh of the previous day, according to Enagás.

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