There are barely two days left until the first anniversary of the entry into operation of the Iberian exception, which made it possible to set a limit on the price of gas used for electricity generation. The balance of the application means a saving for Spanish customers of the electricity market of a little more than 5,109 million euros.
The bulk of the savings took place during the six months of application of the measure in 2022. According to the data presented by the Prime Minister, Pedro Sánchez, in the intervention to take stock of the year, the savings of the Iberian exception in 2022 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 that was applied.
The most benefited by the reduction were consumers whose bills were indexed to the regulated market, known as PVPC. “In the first six months of application, the savings of those whose bills were indexed to the regulated price of light (PVPC) was between 1,800 and 2,100 million, which means 38% less per household, which would be around 209 euros”, explains Natalia Collado, Esade EcPol economist and one of the authors of the study that the organization carried out on the measure.
His assessment is that “the Iberian exception has met the objective of lowering bills, at least for PVPC customers, which is what we have analysed”, he says.
“This is a very smart measure. The reason for the escalation of prices is fully affected by the contagion of the volatility of international markets. It cut this connection and has shown that without volatility its application was no longer necessary”, explains the general manager of the energy consultancy Tempos Energia, Antonio Aceituno.
Just a year ago, two days before the application of the Iberian exception, not everyone would have signed this result. Teresa Ribera’s proposal attacked one of the sacrosanct concepts on which the European Union is based, the market unit. Spain and Portugal obtained the rare notice 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 the production of electricity The rest of the countries of the European Union paid it at prices that reached up to 300 euros in August.
“The beginning of the measure took place in a very adverse scenario. It coincided with a heat wave that shot up demand and at a time when EU countries had to stock up for the winter,” recalls Antonio Aceituno.
“Although there are no doubts about the effectiveness, the measure has not been without risks. In fact, it is the reason why, despite the fact that it was assessed, Brussels did not generalize it for the rest of the countries”, points out Natalia Collado.
The risks to which the Esade EcPol economist refers is the fact that France has taken advantage of the cheaper prices of Spanish electricity to demand it more than ever. Exports have marked historical highs during the period. “This has meant that more electricity has had to be produced in Spain and, therefore, the combined cycle power plants, which are the ones that consume the most gas, have produced longer”, he says. Critics of the measure welcome the situation to ensure that “much more would have been saved without this transfer of income to France”.
They are all partly right, but now that the price of gas on the international market has calmed down and is approximately 30 euros, the debate is focused on whether the measure in force should continue or not. Spain has managed to extend it from May 31, 2023 initially planned until December 31. “It is a safeguard against possible new turbulence”, defends Teresa Ribera. Another further extension would only be possible if Europe extended the umbrella under which it authorized the exceptional measures due to the war. “Only in this exceptional context could it continue”, they say from the ministry.
Everything will depend on the international context, China’s demand or 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 to obtain 100% in August. It is not a question of expanding the measure, but that it serves as a guide for the necessary reform of the European energy market and allows the final consumer’s receipt price to be decoupled from the volatility of the markets”, states Aceituno.
Along these lines, although not with the ambition he proposes, the Council of Ministers today plans to approve the new PVPC, which when fully implemented will have reduced the impact of market volatility on the price to 45% receipt of final consumers. The other 55% will be indexed to futures markets, which tend to be more stable.
