Spain approves gas price cap to make electricity bills '30% cheaper'

The Spanish government approved a 12-month gas price cap to help bring electricity costs down in an extraordinary cabinet meeting on Friday morning.

The so-called "Iberian exception" to the EU price-setting mechanism is expected to allow Spain and Portugal to set a maximum rate of €40/MWh for the first six months and rise to just below an average of €50/MWh for the remaining six months.

The measure, which is yet to be formally greenlighted by the EU although government officials say it has its backing, should make electricity bills in the regulated PVPC market around "30% cheaper". 

This should bring wholesale electricity prices down to an average of €130/MWh – on May 13, the regulated market price averaged €202.99/MWh, peaking at €242.74. 

According to ecological transition minister Teresa Ribera, who addressed the press not long before midday on Friday, it should take Brussels "days or a week or two" to approve the price cap. Before then, it will not be "fully operational" although Spain will publish the measure in the official gazette (BOE) on Saturday. 

This should benefit 37% of households and 70% of industrial businesses across Spain as well as help rein in inflation in the face of market volatility exacerbated by Russia's invasion of Ukraine.  

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