The Operator of the Iberian Energy Market (Omie) launches this Tuesday the new Iberian mechanism that allows capping the price of gas used for electricity consumption at 40 euros megawatt hour and prevents the rest of the energies from being remunerated at the price of that gas as has been done until now, according to the rules of the wholesale market.
In this Tuesday’s auction, the prices for each hour of the day will be set for the first time according to the new and exceptional regulations authorized by the European Commission last Wednesday and ratified on Thursday by the plenary session of Congress.
It will be applicable for 12 months, until May 31, 2023 and as agreed with the European Commission to prevent the new regulations from distorting the single electricity market, Omie will have to hold two auctions. One in which the gas ceiling will be marked, which during the first six months will be 40 euros per megawatt hour (MWh), and another with the prices set by the market, as has been the case until now.
The prices that are known in the auction this Tuesday will be the ones that will be applied to the consumer’s bill on Wednesday. The Government has estimated that with this mechanism the savings in the monthly bill will be between 15% and 20% compared to the previous system. Although we will have to wait until the end of July to be able to count its impact for a full month. This calculation already includes the cost that each of the consumers of the Spanish electricity system must assume for the compensation that must be paid to the combined cycle plants that use gas to produce electricity. In total they will be about 6,300 million euros.
The first to notice the reduction will be private consumers whose receipts are linked to the regulated price (PVPC), 37% of the total. Also 80% of the companies that in one way or another have part of their energy consumption linked to the wholesale price of electricity. For the rest of the consumers, both companies and individuals who have signed fixed contracts with the electricity companies, the reduction will depend on the conditions agreed in the contract and the moment of its renewal. In other words, if a client signed yesterday, Monday, the renewal of his contract, he will not be affected by the reduction, but he will not have to pay compensation for the reduction at any time. On the other hand, those who sign the revisions of their contracts will have to pay it from this Tuesday.
