Portugal and Spain confirm joint proposal of cap on wholesale electricity price

Spain’s minister for ecological transition confirmed that the governments of Spain and Portugal intend to present a joint proposal to other European Union members to limit the electricity price per megawatt hour (MWh) in the wholesale market.

Portugal’s minister of environment had said that Portugal was negotiating with Spain to design a safeguard mechanism in the Iberian electricity market, Mibel, that would result in a net monthly saving of 1.1 billion euros for Portugal.

Speaking to radio “Onda Cerro”, Spain’s minister for ecological transition and the demographic challenge, Teresa Ribera, said that if just two years ago a benchmark price of 180 euros for 1MWh “seemed like madness that would never be reached and today it is largely surpassed” then there is “little question that it should be the maximum limit we should accept in our market.”

In this scenario, she said, the Spanish government is waiting to take action to secure a response from the European Commission, in a move that she said can be seen as an opportunity to build more Europe.

She stressed, however, that she will give a national response of decouple the gas from the electricity market if the EU delays taking action.

Portugal’s minister said on Tuesday that the proposal involves imposing a maximum price of 180/MWh on the spot market for electricity – which this month exceeded the 500 euros for the first time.

He said that the new joint proposal could mean “a net monthly joint saving, shared between Portugal and Spain, of 5.7 billion euros, for a monthly extra cost of gas of 1.25 billion euros,” with “the net monthly Portuguese saving around 1.1 billion euros, for a monthly extra cost of gas of around 250 million euros.”

“We believe it is a European decision because the regulation is European,” said Ribeira. “What happens is that the analysis of the economic situation and the need to protect our citizens and industry leads us, as a government, to consider taking decisions to protect the national interest in case Europe is not up to the task in the type of measures that are adopted.”