The Government approves the limit on gas that will reduce the electricity bill for the next 12 months

The Government has approved this Friday the gas price limit which is used to produce electricitya proposal that will result in a lowering of almost 40% in the average price of the wholesale electricity market. It was announced by the Minister of Ecological Transition, Teresa Ribera, in a Council of Ministers held in an extraordinary manner.

“The mechanism consists of a limitation in the reference price of gas, which will start with 40 euros/MWh for six months and will grow little by little until reaching a average of 48 euros/MWh of gas” on average during the 12 months that it will be in force. According to Ribera, the measure supposes a response “that has little precedent, or none” in the past.

Ribera explained that the wholesale price of electricity will go down around 130 euros/MWh on average, a figure far from the 210 euros/MWh that it has cost on average during the first quarter of the year. This is almost a 40% less.

The drop will mean “a net benefit for all consumers”, but in the case of those covered by the regulated rate they will notice it “immediately”, as indicated.

With respect to its entry into force, He has indicated that it will take place “the day after the official publication in the BOE”, something that he has anticipated that they hope will take place this Saturday. However, it needs the approval of the European Commission, which may take a week or ten days.

Thus, a project presented by Spain and Portugal at the end of March is launched and that both countries, together with Brussels, have been polishing until this Monday.

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“Immediate effect” for consumers covered by the regulated market

“The most immediate effect is that the only electricity that is going to be paid at the cost of gas is that generated using natural gas. We eliminate the contagion effect to the rest of the energies (…), which will mean a very significant reduction in extraordinary profits (…)”, Ribera pointed out.

Therefore, “it will produce a net benefit to all consumers“, according to Ribera, although customers in the regulated market will notice a greater decrease. “It will have a immediately in consumers covered by the PVPC” and a “progressive effect” on other consumers, he pointed out.

It will benefit the 37% of domestic consumerssome 11 million homes covered by the PVPC, and up to 70% of the industrialists covered by this rate, according to the minister.

It will enter into force when Europe approves it definitively

He has indicated that “we hope that it will be approved in the BOE tomorrow”. In any case, “the entry into force will take place the day after the official publication in the BOEand we will have to wait for the European Commission to officially approve the support for the standard that is published in the official gazettes of both countries,” Ribera said. During this time, companies must provide clear information to consumers about how much they will finally pay on your bill.

In any case, it is subject to the definitive approval of the European Union, which may take time, according to Ribera, a week or ten daysso that until then the adjustment will not take place in the wholesale market auction.

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For the first time they do not pay the same. For the first time, the measures that are adopted (…) have the fundamental purpose of reducing the extraordinary profits of electricity companies “and that” there are net benefits for all consumers “, he pointed out.

Along these lines, the also Minister for the Ecological Transition has reproached the large electricity companies for their lack of response in recent months to the increase in the price of electricity. “We would have liked very much that they had behaved more in accordance with the payment capacity of households or the needs of industrialists”, she has expressed.

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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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