All you need to know

The limit on the price of natural gas approved this Friday by the Government will result in a drop in the wholesale price of electricity. “It will be a net benefit for all consumers“, as explained by the Minister of Ecological Transition, Teresa Ribera. In this way, the cost of the gas used to produce electricity will not reach 50 euros for a year and this It will lower the electricity bill between 20% and 30%according to experts.

It will affect the clients of the regulated rate “immediately”, according to the minister, a modality to which the 37% of domestic consumers and the 70% of industrialists.

Seeing this horizon, customers want to know how it will affect their electricity bill, how much savings it will entail and which customers it will affect.

The “Iberian exception”, key to lower energy prices

The “Iberian exception” It is the joint proposal of Spain and Portugal that the European Union recognized on March 25. Both countries asked to be considered as one “energy island” to be able to activate their own measures that would affect them, since their energy interconnections with the rest of Europe do not reach 3% of the market, according to what President Sánchez said at the time.

Once this “Iberian exception” has been recognized, both governments have margin to start tools to lower the price of energy, although these must also be approved by Europe. Thus, this Friday Spain and Portugal have approved the limit on the price of gas used by power plants to produce electricity with the ultimate goal of lowering the electricity bill.

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What is the maximum price of gas?

It has been established in 40 euros/MW/h during the first six months. This price will grow over time 12 months validity of the mechanism, until reaching an average of 48 euros/MWh throughout that period.

When does it come into force and for how long?

The rule will be published foreseeably in the Official State Gazette (BOE) this Saturday or this Monday and will enter into force the following day, although full application will be subject to final approval by the European Commission, which, according to Ribera, could be delayed a week or ten days.

How much will the price of electricity go down?

With the limit on the price of gas, the average price of the wholesale electricity market will drop to €130/MWhin front of the €210/MWh on average registered in the first quarter of the year, as Minister Ribera pointed out this Friday. This will imply a reduction in the electricity bill between 20% and 30%, according to experts, depending on consumption.

“This will mean a reduction in the invoice of some 30 euros for each householdHowever, it is expected that, although it will put a ceiling on inflation, its impact on prices will be modest,” José Luis Lancha, professor at the Comillas University’s Higher Technical School of Engineering, explains to TVE.

“The bill could be around 85 euros per month, a significant reduction compared to the last bill that is 102 euros, the one for the month of April,” Enrique García, spokesman for the Organization of Consumers and Users, tells TVE. (OCU).

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Which customers does it affect?

The drop will mean “a benefit for all customers“although it will affect”Immediately“to those who are welcomed to the regulated marketwhile those belonging to the free market they will notice it “progressively”.

They will notice immediately the 37% of domestic consumers (some 11 million households) and up to 70% of the industrial ones, which are the ones covered by the regulated rate, the so-called PVPC, as stated by the minister. It should be remembered that these customers have a contracted power of less than 10 kilowatt hours and, among them, there are families covered by the social bond.

On the other hand, consumers will also benefit from the free market that have a fixed price contracted with your company, although the minister has clarified that they will notice in a “progressive” manner.

In this case, consumer organizations believe that the regulated price will end up being cheaper than that of many free market contracts. Therefore, users are recommended look at the fine print on the bill get them home.

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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