The BOE publishes the gas cap to reduce the ‘pool’ by 38%

After its approval in the Council of Ministers on Friday, the third vice president of the Government and Minister for the Ecological Transition, Teresa Ribera, said that once the measure enters into force this Saturday and at the expense of the European Commission formally adopting support for the rule, which could be delayed up to “about two weeks” -, it will mean an immediate improvement for 37% of domestic consumers and for 70% for industrialists.

In this regard, sources from the Ministry for the Ecological Transition specified that the mechanism, despite its publication as a Royal Decree-Law, will thus be pending the formal decision of Brussels and to be initialed by an order of the minister for its application.

The third vice president estimated that thanks to this measure the price of the ‘pool’ will fall by around 38% in its average price, from 210 euros per megawatt hour (MWh) marked throughout the first quarter of this year to about 130 euros / MWh. In this way, the only electricity that consumers will pay at gas cost will be that produced with gas plants, according to Europa Press.

The measure will thus help to contain the escalation of prices and inflation and, above all, will act as a firewall against the volatility of gas prices derived from the war in Ukraine, it will also facilitate the reform of the regulated tariff -the so-called PVPC-, incorporating price references from the futures markets.

Ribera said that, once the measure is in force, consumers in the regulated market will notice this relief in the price of electricity “immediately”, while for the rest of consumers in the free market it will be something “progressive”, benefiting when they renew or change, “since their annual review will have the reference with lower prices”.

The head of Ecological Transition and the Demographic Challenge also warned that electricity companies must provide the “detailed” information of their ‘retail’ contracts, “not those that sign with their marketer, but the real contracts paid by consumers”, to control that this volume of “benefits ceases to be paid by consumers”.

“Which does not mean that they enter into losses, they will continue to obtain benefits,” he stressed, lamenting that the electricity companies have not had “a behavior more in line with the situation of the moment” making offers in the free market “more adjusted to the needs of households or industrialists.”

Since the entry into force of the Royal Decree-Law, which does not apply the mechanism, marketers will have a period of five days to offer a “still photo” of what is their market demand exposed to the ‘spot’ market and what part has to hedges or fixed contracts.

Subsequently, there will be another seven-day period for the market and system operator to implement the procedures and systems for the implementation of the mechanism.

In addition, a sanctioning regime will be established to avoid actions contrary to the correct behavior of each and every one of the market agents, with “very serious infractions” in the event that they do not comply, indicated in sources of the Ministry.

On the other hand, the Royal Decree-Law also includes the mandate to modify the calculation methodology of the PVPC to incorporate references based on a basket of forward products and the daily and intraday market. This will combine stability with incentives for energy efficiency, storage and demand management. The new PVPC is expected to start implementing from the beginning of 2023.

At a press conference after the Council of Ministers, Ribera highlighted that this measure, which is a response “that has little or no antecedents” in the past, since Europe has understood “the causes why Spain and Portugal must have this exception”, will be “an umbrella” to protect domestic consumers and large industry in the current context of tension in energy prices, aggravated especially by Russia’s invasion of Ukraine.

He also stressed that “for the first time they will not pay the same” and the measure aims to “reduce the extraordinary benefits of the electricity companies so that there are benefits for all”, being a complementary measure to the reduction of gas.

Source: Expansión