The Government proposes a cap on the cost of gas and a price formula that considers “the cost of clean technologies”
“In exceptional situations, Member States should be allowed to tailor electricity price formation to their specific situations (mix, resources, level of interconnections).” Spain thus requires the European Commission to free countries that request it from the general pricing rules, as an emergency formula to contain price escalation. The request is included in the proposal being debated this Tuesday at the extraordinary council of energy ministers held in Luxembourg.
It is part of a proposal spread over three pages in which a series of initiatives are proposed in three fundamental areas: the electricity market, the joint gas purchase platform and the supervision of the emissions market; the three fields of action that the Government has been insisting on for months and that supported the position of the Prime Minister, Pedro Sánchez, during the leaders’ summit held last week in Brussels.
“Exceptional times urgently require exceptional measures”, insists in a document that specifies that “each increase of +1 EUR / MWh in the price of natural gas represents 2,700 million euros per year in additional electricity costs for all European consumers, diverting resources from the energy transition and economic recovery. ‘ A situation that, he adds, “is getting worse every day.”
A price distortion that “cannot be transmitted to consumers, especially in times of economic recovery” and which leads Spain to demand “European action to avoid asymmetries and ensure that Member States work in the same direction avoiding different measures that they could cause additional distortions. ‘
On the energy market, he puts two proposals on the table. The first: “The marginal price affects electricity futures signals and has a high impact on inflation, reducing the effectiveness of the hedging mechanism.” In these »extraordinary circumstances, instead of the pure marginal price signal (contaminated by increases in gas prices), the price of electricity would be obtained as an average price with reference also to the cost of« inframarginal »clean technologies. (particularly renewables) ».
With this formula, Spain considers that the price of electricity would be directly linked to the national energy production mix, “while protecting consumers from excessive volatilities and allowing them to participate in the benefits provided by a cheaper generation combination.”
Gas rates
The second idea related to the market would be “to establish a price cap on the price of the offers of electricity produced by natural gas. This measure requires subsequent compensation that would be recovered in the following months.
At the entrance to the debate, the Secretary of State for Energy, Sara Aagesen Muñoz, who has not alluded to the specific ‘release’ of the price system, has referred to the two previous proposals to avoid the impact of the wholesale market and also also to initiatives related to the joint purchase of gas and emissions trading.
Regarding the first, he stressed that Spain puts on the table call options contract formulas that “could be done centrally, with management by the member states and that will be activated in situations of risk” in supplies.
Regarding emissions trading, Aagesen highlighted Spain’s demand to put an end to financial speculation that “reduces the competitiveness of our industry and capacity for evolution”. The proposal that Spain has brought to the Luxembourg debate focuses on “acting on the agents who can choose to buy, raising an excess of rights in the market, a time limit or period in which those rights can be active, and set targets within the EU to have predictability over time. ‘
.