Everything, absolutely everything, is still waiting for the investiture. But some energy unknowns are beginning to move into the realm of certainties: the future Executive of Pedro Sánchez will ask Brussels for an extension of the Iberian exception beyond December 31, according to the sources consulted by this newspaper. Before, however, the European Council will have to give its approval – expectedly, at the end of that month, and after analysis by the Commission – to the extension of the framework of emergency measures following the Russian invasion of Ukraine, in which This extraordinary measure is framed. Something that Spain, which is rushing the final stages of the rotating presidency, strongly supports.
The Iberian mechanism, also known as the gas cap, has been inactive since the end of February due to a double combination of factors: the sharp drop in the price of this fuel in the wholesale market and, more recently, the gradual rise in the gas price threshold. from which it comes into force. The Iberian exception, therefore, has nothing to do with the recent lowering of electricity prices, guided solely and exclusively by the very high renewable generation. Above all, wind.
The Spanish authorities, however, do not want to give up a tool that they believe could be very useful if the price of this fuel rises again, especially after the nervousness unleashed by the war between Israel and Hamas. A possibility that is by no means certain, but that, with two war conflicts open at the doors of the EU and a growing dependence on LNG (the gas that travels by ship and whose behavior is much more volatile), no one dares either. to discard.
If next month the Council gives the green light to the extension of the package of emergency measures to alleviate the social and economic consequences of the energy crisis, the Spanish authorities will convey to Brussels their intention to continue a scheme that – according to their calculations — has allowed consumers savings of 5,000 million euros in the long half-year in which it was active. It will then be when the express negotiation between the three parties involved begins: Madrid, Lisbon and the European Commission, to which the last word corresponds.
Sources from the Ministry for the Ecological Transition and the Demographic Challenge emphasize that the mechanism – which they describe as a “protective shield” – has “stabilized the electricity futures markets, reduced consumers’ electricity bills and benefited the rest of the economy. especially containing inflation.” Although it has not been applied since February, they emphasize, “it continues to act as insurance against price spikes that, fortunately, are not being recorded.” The Government’s intention is, therefore, to guarantee the continuity of this powerful firewall that the rest of the Member States, except Portugal, lack.
Official calculations point to an average decrease of 18% in the wholesale market since the first day that the exception was applied, June 14, 2022. The maximum savings compared to the price that would have resulted without the gas cap occurred in December last year, when it was around 36%. The impact also moved to the sphere of macroeconomics: according to data from the Bank of Spain, in 2022 it reduced inflation by five tenths last year and allowed Spain to separate itself from the rest of the large European countries.
In Brussels, there is no shortage of those who see it as logical for Spain and Portugal to take the step of requesting an extension. Some close observers of this measure are aware that it has worked despite initial misgivings. It would be, they say, a kind of “just in case”, to prevent – in an environment of great geopolitical uncertainty – a potential new escalation of gas from being transmitted directly to the electricity market, reports Manuel V. Gomez. So they don’t see it with bad eyes. But they will have to study the details.
The mechanism was already extended once, at the end of April, so that its scope of application would reach the end of 2023. Then, however, the Community Executive set a schedule of increases in its activation threshold: it has been increasing since 40 initial euros per megawatt hour (MWh) in the Iberian gas market, up to almost 64 euros today and 65 next month. Today, this fuel is priced at less than 35 euros, so its activation remains distant.
At the time, to receive authorization from Brussels, the two Iberian countries claimed – above all – their energy isolation from the rest of the continent. “The Iberian Peninsula has a very specific situation,” said the president of the European Commission, Ursula von der Leyen, in March of last year, when she gave the green light to the creation of this exception. “They have a high percentage of renewables, and that is very good, but very few interconnections. That is why we agree on this special treatment.” At one point, last autumn, the Community Executive even considered extending the measure to the rest of the member states, an idea that was finally discarded despite the good results in Spain and Portugal.
10 days ago, the third vice president and minister for the Ecological Transition, Teresa Ribera, was openly in favor of extending the emergency package with which the Twenty-seven have faced the economic consequences of the war, and which is the legal umbrella in the one in which the Iberian exception is registered. “My natural inclination is that, given that they have not generated distortions and have worked well, all the measures enabled to date are extended as long as necessary,” she said in the European Parliament. Eliminating them, she added, “would be a signal to the markets that we might regret.”
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