Everything you need to know about the gas price limitation approved by the Government

The Government has finally given the green light to the "Iberian exception" that will reduce electricity prices, as announced this morning by the Minister for the Ecological Transition, Teresa Ribera.

Everything you need to know about the gas price limitation approved by the Government

The Government has finally given the green light to the "Iberian exception" that will reduce electricity prices, as announced this morning by the Minister for the Ecological Transition, Teresa Ribera. This agreement, which Spain and Portugal have agreed with the European Commission, seeks to limit the price of gas in combined cycle plants.

Thus, the prices recorded on the electricity bill will be reduced in the coming months, with a maximum limit, which will never exceed 50 euros per megawatt hour (MWh). At ABC we answer the main questions that arise with this new measure.

According to Teresa Ribera, the measure will enter "immediately into force." This month the drop in the price of electricity could already be noticeable considerably.

“It will already be noticed in the bills for the month of May,” he explained in Brussels.

According to experts, this measure will help reduce the electricity bill paid by consumers by between 30 and 40%. However, depending on the rate you have contracted –regulated rate or free market rate–, this new decree could benefit or harm you in the cost of the receipt.

The price of gas will be capped at 40 euros per MWh in the first six months and will then rise little by little until it reaches an average of 48 euros in a year. With this measure, the price of electricity in the wholesale market should not exceed 130 euros per MWh, compared to the current price of more than 200 euros.

This limit on the price of electricity will last for one year and, if the deadlines established by the Government are met, it could start in early May and extend its validity until May 2022.

The cost will be assumed by the electricity companies, as announced by the Minister for the Ecological Transition, Teresa Ribera. The objective is "that the usual ones do not pay", she has defended.

the limitation of the price of gas could instantly benefit Spanish consumers subject to the regulated electricity tariff – known as the Voluntary Price for Small Consumers (PVPC)–. Up to a 40% discount can be received by these users on their final receipt, although the figure will increase or decrease depending on the factors that influence the matching of prices.

Faced with the clear benefits that contracting parties of the regulated rate will experience, customers subject to the free market could be harmed by the limitation of the price of gas.

In this rate, the companies in the sector set a price per kWh that does not have to be subject to the wholesale auction. In this way, although until a few months ago it used to be more expensive than the PVPC, at this time the fixed rate is cheaper than the regulated market.


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