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Sanchez and Costa
The government of Pedro Sanchez seeks again to reduce the electricity pricewhich has been fired for more than a year in Spain and in Europe, and to this end, together with his Portuguese counterpart António Costa, he has managed to get the European Council to allow implement a series of exceptional measures in the Iberian Peninsula that cheapen the electricity bill in Spanish and Portuguese homes in what is now known as ‘Iberian exception’.
This is the second time that the Executive has been forced to take action on the matter since a bill was approved in the second half of 2021. package of rules to limit its price that continue to this day, such as reducing the VAT to 10%, reduce the Special Tax on Electricity (IEE) to 0.5%, and suspend the Value of Production of Electric Energy (IVPEE).
This Friday, Sánchez met with the Twenty-seven and got both Spain and Portugal to be granted temporary “special treatment” due to their circumstances of energy disadvantage compared to the rest of the EU members to take extraordinary measures in the gas marketwhose notable increase in price as a result of the war in ukrainewell Russia It is one of the main gas exporters to Europe.
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There are still, however, several questions about the government’s plan to combat this rise in prices: what are the measures that are going to be taken? When will the discount be reflected on the invoice? How long will they last? And, above all, what will happen to prices when they are no longer valid?
The government plan
The Third Vice President and Minister of Ecological Transition and Demographic Challenge, Theresa Riveraexplained this Saturday in an interview for RTVE that the price of electricity will have a fixed maximum limit that it will be lower than that of gas and that “we are going to introduce a payment system” for it “as appropriate”, with the aim of separate it from the price of electricity and that the cost of electricity is no longer subject to fluctuations in the gas market.
“Therefore, what we will do is separate the gas from the price formation mechanism,” he advanced, emphasizing that the price difference will reach the companies through the electrical system itself with a time adjustment in which, “once we know the volume of gas that we will need in each hour, it will be prorated in the rest of the technologies that are offered to the market”, allowing one tariff to be separated from the other.
It will arrive in homes in about a month.
To start noting it on the invoice we must wait several weeksbecause first the governments of Spain and Portugal will have to send to the European Council this coming week a proposal with the measures that are proposed to be authorized before they can be applied.
After receiving this approach, the Commission will study the proposal to verify that everything is correct or to recommend improvements within a period that could take days or weeks, “and we calculate that in three or four weeks“The answer could arrive” and make it operational immediately, the minister pointed out.
How long will they last?
Regarding how long these extraordinary and temporary measures are going to last, the third vice president has announced that the Twenty-seven also approved this Saturday, “in line with one of the proposals that Spain made last summer”, to create a joint gas purchasing system.
If this were to finally take shape, Ribera pointed out, and the price of the gas that is needed in Europe were reduced, “possibly our adjustment mechanism will no longer make sense and it would be unnecessary”, although “our idea” while all this takes place or not, is “to be able to continue using” of it.
What will happen next
Ribera has contextualized the situation to which the markets have been subjected in the last 12 months, when the demand for gas has increased due to the elimination of coal in terms of ecological transition in a large number of countries and to the Asian market, which is acquiring more gas. All of this has added to the tension caused by Russia, whose gas flows “dropped drastically already in the spring” generating an upward trend in prices since then and which has now been accentuated by the conflict between Ukraine and Russia.
For prevent this from happening againit is necessary for Europe to stop acquiring Russian gas and become energetically independent from Moscowpointed out the minister, who has also added to the list look for other providers, such as Norway, Algeria O Qatarand bet more and more on the renewable energy.