There are barely two days left until the first anniversary of the entry into operation of the Iberian exception, which allowed setting a limit on the price of gas used for electricity generation. The balance of its application yields savings for Spanish customers in the electricity market of just over 5,109 million euros.
The bulk of this saving occurred during the six months of application of the measure in 2022. According to the data presented by the President of the Government, Pedro Sánchez, in his speech to take stock of the year, the savings of the Iberian exception in in 2022 it amounted to 4,000 million euros. The other 1,500 million come from the months of January and February of this year, since February 27, 2023 was the last day it was applied.
Those who benefited most from the reduction were consumers whose invoices were indexed to the regulated market, known as PVPC. “In the first six months of application, the savings of those who had their bills indexed to the regulated price of light (PVPC) was between 1,800 and 2,100 million. This means 38% less per household, which amounts to around 209 euros”, explains Natalia Collado, an economist at Esade EcPol and one of the authors of the study that this organization carried out on the measure.
His balance is that “the Iberian exception has met its goal of lowering bills, at least for PVPC customers, which is what we have analyzed,” he says.
“This is a very smart move. The contagion of the volatility of international markets is squarely involved in the reason for the rise in prices. It cut that connection and has shown that without volatility its application has no longer been necessary, ”says the general director of the energy consultancy Tempos Energía, Antonio Aceituno.
Just a year ago, two days after the application of this Iberian exception, not everyone would have signed that result. Teresa Ribera’s proposal went against one of the sacrosanct concepts on which the European Union is based: market unity. Spain and Portugal got the rare warning that Brussels authorized them to apply a limit, initially of 40 euros per MWh, which has been updated to the current 58.3, for the gas used for electricity production. The rest of the countries of the European Union paid it at prices that reached 300 euros in the month of August.
“The start of the measure occurred in a very adverse scenario. It coincided with a heat wave that triggered demand and at a time when the EU countries had to stock up on supplies for the winter”, recalls Antonio Aceituno.
“Although there is no doubt about its effectiveness. The move has not been without risk. In fact, that is the reason why, despite the fact that it was valued, Brussels did not generalize it to the rest of the countries”, points out Natalia Collado.
The risks to which the Esade EcPol economist refers is that France, above all, has taken advantage of the cheaper prices of Spanish electricity to demand it more than ever. Exports have reached historical highs during the period. “This has meant that more electricity has had to be produced in Spain and, therefore, the combined cycle plants, which are the ones that consume the most gas, have been producing for longer,” she says. Critics of the measure take advantage of this situation to ensure that “much more would have been saved without this transfer of income to France.”
Everyone is partly right, but now that the price of gas on the international market has calmed down and is around 30 euros, the debate centers on whether or not the measure in force should continue. Spain has managed to extend it from May 31, 2023 initially scheduled until December 31. “It is a safeguard against possible new turbulence,” defends Teresa Ribera. Another new extension would only be possible if Europe extended the umbrella over which it authorized exceptional measures in the face of war. “Only in this exceptional context could it continue,” they say from the ministry.
Everything will depend on the international context, the demand from China or the inclement weather. “It is difficult to return to a scenario of volatility like that of a year ago. Gas reserves are at 70% and it is possible that 100% will be achieved in August. It is not a question of extending the measure, but rather that it serve as a guide for the necessary reform of the European energy market and allow the price of the final consumer’s bill to be separated from the volatility of the markets”, invites Aceituno.
In this line, although not with the ambition that he proposes, the Council of Ministers plans to approve today the new PVPC that when fully implemented will have reduced to 45% the impact of market volatility on the receipt price of final consumers. The other 55% will be indexed to the futures markets, which are usually more stable.
