Around 57 euros less than those that would have been paid per MWh without the gas price limit
MADRID, June 24 (EUROPA PRESS) –
The average electricity price for regulated tariff customers connected to the wholesale market will fall by 5.4% on Saturday compared to this Friday to EUR 214.66 per megawatt hour (MWh).
This price for PVPC customers is obtained by adding the average price of the auction on the wholesale market to the compensation payment that demand will pay to combined cycle power plants for the application of the “Iberian exception” limiting the price of gas for electricity generation.
In the auction, the average electricity price on the wholesale market – the so-called “pool” – this Saturday was 128.70 euros/MWh and thus 8.9 euros below today’s price (137.59 euros/MWh). a 6.4% drop, according to Iberian Energy Market Operator (OMIE) data collected by Europa Press.
The maximum electricity price for this June 25 will be registered between 01:00 and 02:00 at 185 euros/MWh, while the minimum price for the day of 65.71 euros/MWh will be between 17:00 and 06:00
To this pool price is added the remuneration of 85.96 euros/MWh for gas companies, compared to 89.31 euros/MWh this Friday. This compensation must be paid by the consumers who benefit from the measure, by the consumers of the regulated tariff (PVPC) or by those who, despite being on the free market, have an indexed tariff.
21% LESS THAN WITHOUT APPLYING THE MEASURE
Without the “Iberian Exception” mechanism to cap the price of gas for electricity generation, the average price of electricity in Spain would have been around 271.95 euros/MWh, which is around 57 euros/MWh more than with the compensation paid to customers of the regulated tariff who use it pay around 21% less on average.
Compared to the previous year, the electricity price for customers of the regulated tariff for this Friday is 148% above the 86.57 euros/MWh that the “pool” marked on average for June 25, 2022.
The Iberian mechanism, which came into force on June 15, limits the gas price for electricity generation to an average of 48.8 euros per MWh over a twelve-month period, covering the coming winter when energy prices are more expensive.
Specifically, the “Iberian exception” provides that natural gas for electricity generation will be increased at a price of 40 euros/MWh in the first six months and then by 5 euros/MWh monthly until the end of the measure.
AN EXPECTED GOVERNMENT REDUCTION OF 15% ON RECEIVING
In its calculations, the government limited the revenue cut for the average electricity consumer covered by the PVPC-regulated tariff to 15.3% during the 12 months of application of the approved natural gas power generation cap, according to the evidence in the Impact Report accompanying the Legislative Decree and to which Europa Press had access.
For the commercial consumer, who is fully exposed to the “spot” price, the government estimated a reduction of between 18% and 20%, with the first month of the mechanism fluctuating between 15% and 17% and between 13% and 15% last.
The prices of the “pool” directly affect the regulated tariff – known as the PVPC – to which nearly 11 million households in the country belong, and serves as a reference for the other 17 million who have contracted their supply on the open Market.
In fact, the National Commission on Markets and Competition (CNMC) has determined that in 2021, as part of energy’s upward spiral, around 1.25 million people have switched from PVPC to a fixed-price open-market tariff.
In addition, Prime Minister Pedro Sánchez announced on Wednesday that the legislative decree that the Council of Ministers will adopt this Saturday to expand measures to mitigate the economic effects of the war in Ukraine will include a 10% reduction in VAT on electricity 5%. A year ago a reduction in this tax from 21% to 10% was approved, now it is to be reduced to 5%.