Last Monday, the President of the Portuguese Republic, Marcelo Rebelo de Sousa, dined in Madrid with a hundred and a half Spanish and Portuguese businessmen, members of institutions and academics. The meeting, organized by the Hispanic-Portuguese Chamber of Commerce and the Conselho da Diáspora Portuguesa, was held on a day as important as April 25, commemoration of the Carnation Revolution. Grândola, Vila Morena was not sung, but those present heard Rebelo de Sousa emphasize the fraternity between the two peoples in social, cultural, economic and, above all, energy matters.
Precisely, while he was speaking on this matter and others of a peninsular nature in a high-class hotel, the heads of the Energy and Environment portfolios of both countries (Teresa Ribera, for Spain, and José Duarte Cordeiro, for Portugal) finalized in Brussels the proposal that they were going to present the following day to the Commissioner for Competition, Margrethe Vestager, to defend the “Iberian exception” in the system for setting electricity prices. The Iberian Peninsula suffers the damage of the poor connection with the rest of Europe that makes it de facto an energy island, which is why the Prime Ministers, Pedro Sánchez and António Costa, took the request to the European Council in March that is now has become a historic agreement and that Ribera and Duarte closed with Vestager.
Broadly speaking, it consists of limiting the price of gas (and coal) to an average of 50 euros per megawatt hour (MWh), starting at 40 euros and then gradually rising (in principle, Madrid and Lisbon proposed an average of 30 euros) for a anus. On the other hand, the peninsular price will be the same as that applied to energy produced on the peninsula and exported to France. In this way, the possible discrimination warned of by the Iberian market operators is avoided, who stressed that a regulatory risk could arise when two auctions were established, one for the internal market and the other for interconnection.
The 50 euro ceiling means that the average daily price of electricity will not exceed 130/140 euros MWh (each euro of gas represents around 2.30 euros of electricity per MWh). In other words, for a home with a PVPC regulated rate (10.5 million users) and a monthly consumption of 292 kWh with 4.6 kW of contracted power, the bill would be around 85 euros per month, compared to 143 euros in March and 100 in April, although it is above 70 in April 2021, according to the OCU.
This measure is about putting a stop to the runaway price of the electricity bill and reassuring the consumer in the face of the inflationary spiral; but the agreement drags polemics and critics. The consumer association, despite highlighting the progress of the measure, describes it as a patch that does not address the dysfunctions created by the marginal system used in the electricity sector. Given this, they expect new structural measures. For their part, the electricity companies, in a permanent struggle since the Government set its sights on them by cutting the extra profits obtained by selling cheap energy (renewable and nuclear) at the price of gas, assure that it creates legal insecurity and they wonder how The discount will be passed on to consumers. For this, they wait for the details to be known in the next Council of Ministers.
Some points need to be clarified. It happens that the plants that use gas will continue to pay the market price, which now exceeds 200 euros MWh, and they have to continue operating (today they cover between 20% and 30% of the market). That is, there is a differential that someone will have to cover. Government sources assure that it will not go through Budgets and that it will be charged to the system. The question is whether that means that it will be included in the rate as one more charge along with transport, the rate deficit, extrapeninsular costs or renewable premiums.
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The Executive will have to explain how it is covered. According to Ribera, the same consumers who benefit from the measure will pay for it. “We do not want to load the system with new costs and we must pay what we consume. Those of us who benefit from the adjustment will pay based on the energy we consume, and even then we will pay less. Even consumers with long-term contracts will only see the price updated when the contract is revised”, underlined the vice president, whose conclusion is that the price reduction is enough to pay for the adjustment and obtain a profit.
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