The European Commission approves the “Iberian exception” proposal formulated by Spain and Portugal last May. The mechanism, which will be implemented from June 14, 2022 until May 31, 2023, is initiated to contain the rise in electricity prices and to cover the coming winter.
The cap will have a direct effect on contracts indexed to the pool as well as fixed-price contracts negotiated from April 26, 2022.
The adjustment mechanism uses a mathematical formula to limit the price of gas consumed by thermal power plants. The reference price for gas will be €40/MWh during the first six months of implementation of the regulation. Then it will increase by €5/MWh monthly, reaching €70/MWh at the end of the period.
The price of electricity, resulting from the same formula, will mainly depend on the price of gas in the Mibgas market and the price of CO₂.
The cost of the adjustment is distributed among the demand that benefits from the mechanism. That is, direct consumers in the market, marketers, and market agents who purchase energy at an indexed price in the wholesale market.
