Iberian exception: electricity market operators warn of impact of Spain and Portugal plan to cut electricity | Economie

Electricity market operators in Spain and Portugal are warning of “significant and relevant impacts” called so-called Iberian exceptionthe plan submitted by the governments of Madrid and Lisbon to Limit €30 per megawatt-hour (MWh) The price of gas and coal that is burned to generate electricity. The rise in the price of the first is primarily responsible for the sharp rise in electricity prices in recent months.

In a letter sent to the Minister of State for Energy Affairs of Spain and Portugal, as well as to the supervisors of the stock market in each country (CNMV and CMVM) and to MIBEL Technical Committee (CNMC, ERSE, CNMV, CMVM), OMI – in which the country’s major energy groups (such as Endesa, Iberdrola, Naturgy, Repsol or EDP) and financial groups (Santander or BBVA) are involved – and operators OMPI, BMEClearing and MEFF are warning that “the potential interference of the market incompatibility with the rest EU countries will cause strong regulatory risks, threatening the necessary credibility of the price formation process.” On the other hand, the operator of the Iberian wholesale electricity market, OMIE, is not among the signatories to the text.

They add, “The lack of a clear, unambiguous and indisputable regulatory regime for price setting and a limited application period, would cause significant insecurity and legal risks, particularly with respect to all derivative contracts already in circulation.” Namely, that companies generally cover electricity price fluctuations through hedging contracts in the futures markets, the prices of which are set according to prices at daily auctions and in the spot markets. In this way, they say, any distortion in those prices by fixing a ceiling will distort those derivative contracts as well.

According to market estimates, about 160 TWh (TWh) are exposed to financial centers in the Iberian market, just over 60% of the estimated consumption of electricity per year in Spain, which amounts to about 260 TWh per year. Thus, the signatories to the letter argue that if this limit was chosen on the price of gas, it would be a common measure by all EU members, not just one affecting Spain and Portugal, or a regulation that sees light sets, for “legal, economic and financial security”, The OMIE reference price that will serve as the basis for all electricity derivative contracts on the Iberian market.

However, they are aware of the relevance of governments’ “search for solutions” in a situation like the current one, which is characterized by the need to accelerate the energy transition in the context of geopolitical tensions, especially after the outbreak of the war in Ukraine, and price fluctuations, which have led to an unstoppable rise in gas prices. All over the world, especially in Europe. They stress that this has also had an impact on the electricity market, with “an unprecedented price hike in the past year, which has caused serious economic difficulties in the fabric of Iberian business, in the ability and inclination of households to consume energy and the strength of social unrest”.

Spain and Portugal have proposed Brussels as a formula to reduce the electricity bill A cap of €30 per megawatt-hour on the price of gas and coal used to generate electricity. However, this proposal, which has been strongly rejected by the electricity sector, must win the approval of the European Commission. Third Vice President and Minister of Environmental Transformation, Teresa Ribera, He trusts that at the beginning of May Brussels will give the green light for the measure to enter into force.