EU agrees to extend Spain gas price cap until end of the year

Ribera announced the agreement on Tuesday March 28th upon arrival in Belgium to participate in a meeting of EU energy ministers, but confirmed that the deal must still be approved by the Spanish Cabinet and Brussels.

“It is a tool that will allow us to continue protecting Spanish and Portuguese consumers until the end of the year,” Ribera said.

Ribera also indicated there would be some “adjustments” to the price, which until now increased by €5 per month, and will now increase by around €2 per month. “The curve by which this reference is increased each month becomes longer and smoother”, indicated the minister.

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Essentially this means that the agreement enables the extension of the gas cap at an average of €55 to €65 per megawatt-hour.

However, she pointed out that if natural gas remains at the current price, the mechanism will probably not be activated, although if necessary, it would allow a “reasonable” cost to be maintained, so as not to be “dependent” on the price evolution of natural gas.

The so-called Iberian mechanism was put in place in Spain and Portugal after the two countries reached a deal with the European Commission in the spring of 2022.

The plan enables fossil fuel plants’ power costs to be subsidised in a bid to bring down soaring electricity prices which have affected Spain and many other EU countries.

The mechanism was due to expire on May 31st, but will hopefully now be extended for a further seven months.

Ribera had originally said at the beginning of the year that the Spanish government wanted to extend the price cap until the end of 2024 and set the cap at €45 or €50 per megawatt-hour.