Spain, Portugal present plan for cutting electricity costs

Spain and Portugal on Thursday sent Brussels their joint proposal for lowering electricity prices in the Iberian peninsula, Spain’s ecology minister said.

The move came a week after the European Union agreed that Spain and Portugal could deviate from the bloc’s rules on energy pricing to ease the impact of energy prices on consumers.

The decision to grant them “special treatment” came after their efforts to convince Brussels to decouple electricity prices from the gas market fell on deaf ears.

“We have a joint proposal… and we’re working with the European Commission” to push it through, Teresa Ribera told reporters.

The proposal involves capping the price of gas used for the generation of electricity to the equivalent of “30 euros ($33)” per megawatt hour, she said.

Such a cap, which would significantly reduce the price of electricity on the wholesale market in both countries, “is one of the technical elements of the proposal we need to discuss” with Brussels, she said.

Prices are particularly high in the Iberian peninsula, with both Spain and Portugal heavily dependent on gas to produce electricity.

Prices have risen sharply in both countries in recent months due to the rules governing Europe’s electricity market which obliges producers to sell electricity on the wholesale markets at a price determined by the most expensive production costs — that of gas-fired power plants.