The Diplomat
The governments of Spain and Portugal reached an agreement yesterday with the European Commission to set at 50 euros per megawatt (MWh) the average reference price for gas in order to lower the price of electricity.
The agreement was reached yesterday in Brussels by the Third Vice-President and Minister for Ecological Transition and the Demographic Challenge, Teresa Ribera, and the Portuguese Minister for the Environment and Climate Action, José Duarte Cordeiro, with the European Commissioner for Competition, Margrethe Vestager.
On March 30, the Spanish and Portuguese governments submitted a proposal to the European Commission to set the reference price at 30 euros. The final agreement – with an initial price of 40 euros but which will set an average price of 50 euros/MWh over the twelve months it remains in force – does not, therefore, fully meet the demands of the two Iberian countries, but it is still much lower than current gas prices, which traded yesterday on Mibgas – the Iberian market – at almost 80 euros. Apart from that, the new price will bring the price of electricity down to around 120-140 euros/MWh, compared to more than 200 euros at present.
“We have reached a political agreement with the European Commission,” announced Teresa Ribera at a press conference. It is a temporary instrument, “as requested by the Commission”, and in the coming days the procedure will be completed to “have the Commission’s backing” and be able to “implement it immediately”, she continued. The objective, the Vice-president assured, is “to have resolved” the part corresponding to the formal communication from Brussels before this weekend so that the proposal can go to next week’s Council of Ministers “with immediate application, beyond the technical adjustments for the functioning of the market”.
For his part, the President of the Government, Pedro Sánchez, announced yesterday before the plenary session of the Senate that “a political agreement had been reached between the Government of Spain and the Government of Portugal with the European Commission to set a reference price for the next twelve months for gas that produces electricity”. This is “very good news” for “consumers, small and medium-sized companies and industry in our country”, he continued. “I do not ask you to applaud the action of the Government of Spain, but at least to recognize the efforts and policies that we are moving forward thanks to dialogue and thanks to the proposals that we are putting in place at the Brussels level,” he added.
The agreement comes almost a month after the European Council granted Spain and Portugal the right to manage their own energy prices, due to the “energy island” character of the Iberian Peninsula because of its very low interconnection with the European energy market. The “Iberian” solution was proposed by Pedro Sánchez and the Prime Minister of Portugal, António Costa, after noting the impossibility of convincing the 27 EU Member States to fix the price of gas in order to contain electricity prices in the wholesale market, a proposal defended by Spain, Portugal, Italy, Greece and Belgium and radically opposed by Germany and the Netherlands.
