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Brussels agrees to extend Iberian exception to help keep electricity prices down

Brussels agrees to extend Iberian exception to help keep electricity prices down

Energy ·

It will allow Spain and Portugal to extend the mechanism, which imposes a cap on electricity generated with natural gas and to prevent high prices being passed on to consumers' bills, until the end of December

Olatz Hernández

Wednesday, 29 March 2023

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Spain's Minister for Ecological Transition and the Demographic Challenge, Teresa Ribera, announced on Tuesday 28 March an agreement with the European Commission to extend the Iberian exception on electricity prices until the end of the year.

The agreement reached with the EU executive will allow Spain and Portugal to extend the Iberian mechanism, which imposes a cap on electricity generated with natural gas and to prevent high prices being passed on to consumers' bills.

Spain's Minister for Ecological Transition and the Demographic Challenge, Teresa Ribera.
Spain's Minister for Ecological Transition and the Demographic Challenge, Teresa Ribera. José Ramón Ladra

"This tool will allow us to continue protecting consumers and businesses, although if current gas prices are maintained, it will probably not be activated," Ribera said. The mild winter has benefitted the bloc’s gas reserves, which has moderated the price of energy in recent months. However, Brussels' approval of the extension of the Iberian mechanism "will allow electricity to be kept at a reasonable price" in the event that the cost of gas rises.

The extension of this mechanism has also involved "some adjustments" to accommodate it. According to the Minister, the reference price will increase from the current 55 euros per megawatt-hour to 65 euros in December, which means "a smoother price curve" compared to the previous one. "It will increase by around two euros each month, instead of the five that it has increased until now”.

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