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

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 power plants.

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

When will the price drop be noticed?

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

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

How much will the bill be reduced?

According to experts, this measure will help lower the electricity bill paid by consumers by 30 to 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.

What will be the new cap?

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

How long will it be in effect?

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

Who will bear the cost?

The cost will be borne by the electricity companies, as announced by the Minister for the Ecological Transition, Teresa Ribera. The objective is “that they do not pay the usual ones”, he has defended.

Which rate is most recommended?

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

Does it hurt me if I have the free market fee?

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

In this tariff, companies in the sector set a price for the 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 the moment the fixed rate is cheaper than the regulated market.

Source: ABC