WHOLESALE electricity prices in Spain will be capped for a year starting from May.
Based on current wholesale rates, the move would produce an estimated 25% cut in domestic and industrial power bills.
A deal struck alongside Portugal with the European Commission means both countries will pay a maximum of €40 per megawatt hour for electricity.
That will have to rise to an average €50 over the 12-month agreed period for the capping.
A maximum price of €30 per megawatt hour had been proposed by the Spanish and Portuguese governments.
EU leaders agreed in March to allow the Iberian countries a special exemption over pricing policy.
That’s due to the large amount of renewable energy being produced and few electricity links with the rest of the EU, barring a key Spanish export connection with France.
Over a year ago, wholesale prices stood at €20 per megawatt hour but the escalation in gas prices, compounded by Russia’s invasion of Ukraine in February, has seen levels go above €200.
Spain’s Ecological Transition Minister, Teresa Ribera, said the change would be made over ‘coming days’ with the Council of Ministers formally approving the measure on May 3.
The new rates should produce a significant reduction in electricity prices for both domestic and industrial consumers.
Based on current prices, bills would be cut by around a quarter.
Tax cuts on domestic bills were introduced by the government last autumn and are at the moment scheduled to finish at the end of June.
Speaking in Brussels on Tuesday, Teresa Ribera, said:“Industrial and domestic consumers will benefit from the fall in wholesale market prices under an agreement that protects us from turbulence and gas price increases.”
Power bill hikes, along with rises at petrol stations and knock-on effects on food prices, have fuelled Spain’s inflation rate to be close to the 10% mark in March- the highest since 1985.
- Pedro Sanchez in talks with Emmanuel Macron as Spain backs off EU-wide cap on wholesale electricity prices
- Spain and Portugal team up to propose cap on electricity costs
- Pedro Sanchez announces electricity bill tax cuts will be extended in Spain