On Tuesday 3 May the Spanish government is due to approve the decree which will limit the price of gas on the wholesale market to 50 euros/Megawatt hour for the next 12 months. The move will affect millions of consumers all over Spain, and this is what we know about it so far:
Directly and almost instantly, the measure will benefit those who have a regulated tariff (this is shown on bills as PVPC). In these cases, if the price of gas is limited, the price on the daily electric market (known as the pool) will be affected the same way, benefiting 10.5 million consumers.
It appears that the bills sent out from the second half of May will begin to reflect the new electric prices capped by the price of gas. Once government approval has been published in the Official State Gazette (BOE), the market will begin to relax and from then on the difference in price will be reflected in the bills.
With the prices of electricity having shot up in recent months, an average bill of 60 euros a month has doubled even when consumption has remained the same. If the gas is limited to 50 euros/MWh and the electric pool is capped at around 140 euros/MWh, the average bill could be reduced by around 40%. For the moment, IVA will remain at 10% and the Electricity Tax at 0.5%.
That is a good question which has yet to be clarified. As their revenue is being limited, combined cycle plants will need to be compensated in some way. If the cost is spread across all users, a tariff increase on the free market cannot be ruled out.