Ursula von der Leyen, in Slovenia on Monday. / efe

Brussels plans “urgent intervention” to combat soaring electricity prices

The price in Spain is about to hit a new high since the 'Iberian Exception' came into force, and the European Commission insists that the way the cost is set is outdated and needs to be changed

JOSÉ MARÍA CAMARERO Madrid

Electricity prices have risen sharply again in the past two weeks due to the increased price of gas, and Europe has been unable to do anything about it. All countries are affected, including Spain despite its 'Iberian Exception' cap on the gas price. The European Commission has now decided that "urgent intervention" is needed.

EC President Ursula von der Leyen reiterated on Monday what many countries have been saying since Russia invaded Ukraine: the present system of setting prices by hour and day “was developed for different circumstances” several decades ago and so there has to be a structural reform of the electricity market and this is already being worked on.

The Commission’s plans include a review of the current mechanism, in which the technology needed to meet demand for electricity is what sets the daily price. As it is the combined cycle plants – the ones that use gas to produce electricity – that set the cost, and they are the most expensive, the end price has soared.

Von der Leyen said this lies behind the “exorbitant” prices paid on the content in the context of the war in Ukraine: the gas price is linked to that of other energies.

Speaking at the Strategic Summit in Bled, Slovenia, she said the price increases expose the limitations of the present electricity market and called for a European response to the “blackmail” over Russian energy.

“The era of Russian fossil fuels in Europe is over, and freeing ourselves from the blackmail will give us more power to defend the global order,” she insisted.

In fact, the average electricity price for clients in Spain on regulated tariff linked to the wholesale market will rise by 8.5% tomorrow, Tuesday, compared with today, to 459 megawatts per hour, the highest since the Iberian Exception came into force.

If the cap on the price of gas for electricity production had not been agreed, electricity in Spain would be around 521.3 euros per MW/h now, 61.9 euros more per MW/h.

Electricity prices in other European countries will also be especially high on Tuesday. For example, in France it will be over 740 euros /MWh, in Germany over 660, and in Belgium and the Netherlands 622 and 607 euros/MWh respectively.