Belgium, (Brussels Morning Newspaper) Spain and Portugal have announced plans for an EU-wide cap on the wholesale electricity price of 180 euro per MWh.
The move aims to cushion the blow of soaring energy prices as EU member states scramble to protect consumers, Reuters reported on Thursday.
Natural gas prices in the EU started rising last year at a rate that has been picking up pace in the wake of Russia’s invasion of Ukraine.
“We are working on a European response to lower energy prices”, Spain’s Minister for Ecological Transition and Demographic Challenge, Teresa Ribera, said yesterday. Spain, she announced, would implement its own measures if the EU fails to come to an agreement at its next summit at the end of March.
According to Portugal’s Minister of Environment, João Pedro Matos Fernandes, the proposal will be drawn up this week for presentation at the upcoming EU summit.
Cap in place up to 2019
The EU scrapped the cap of 180 euro per MWh for electricity spot prices in 2019, which Spain and Portugal now look to reinstate.
“Until two years ago, the maximum price of 180 euro per MWh seemed like a fantasy that would never be reached, and today it has been largely surpassed”, Ribera noted, maintaining that “there is little argument that this should be the maximum we should accept in our market.”
Earlier in the week, her Portuguese counterpart proposed that the difference should be paid from the European Compensation Fund to the combined cycle power plants that produce electricity for more than 180 euro per KWh.
Yesterday, Matos Fernandes suggested that Portugal could fund the programme from its electricity tariff deficit in the event that the EU fails to agree to the proposal, which would allow Spain and Portugal to save as much as 5.7 billion euro per month.
“The wholesale electricity market is strongly pressured by the price of natural gas, which is registering maximum prices never seen before”, he said, warning that families and businesses in the EU face “irreversible harmful effects” if electricity prices are not capped. For this reason, he hoped that other EU member states would support the plan, although he admitted he was not sure whether they would.