The Government approved the Iberian mechanism to limit the price of gas for the production of electricity, which will reduce the electricity bill for families and companies, announced the Minister of the Environment, Duarte Cordeiro.
“THEtoday approved an unprecedented measure […]a mechanism that has a very clear set of objectives: to limit the scale of prices, to protect those who are most exposed and, thirdly, to socialize the costs and benefits”, the Minister of Environment and Climate Action told journalists today, in a press conference, at the end of the extraordinary Council of Ministers meeting, which took place on the same day as the meeting of Spanish ministers, who also approved the mechanism.
“We will obtain a very significant reduction in the price of electricity, thus generating savings for families and companies”, declared the minister.
The measure will temporarily decouple gas and electricity prices in the Iberian Peninsula, which will thus benefit from an exception, as agreed at the March European Council.
According to what was approved, this Friday, in the Council of Ministers, the mechanism is expected to last around 12 months and allow the average price of gas to be fixed at around 50 euros per megawatt, against the current price of gas. reference in the market of 90 euros, with the price starting at 40 euros.
“It is a temporary and extraordinary measure”, stressed Duarte Cordeiro, stressing that the mechanism will be in force during the period of the year with the highest consumption, that is, the autumn and winter seasons.
According to the minister, “there will be a reduction in the market price” and “a generalized gain for the economy is expected, due to the predictability that the system introduces”.
“It is an additional protection for all those who were exposed to the market price. In a way, it works as a firebreak, which prevents the spread of the gas price to the entire economy”, reinforced Duarte Cordeiro, at the press conference, at the end of this Friday’s Council of Ministers.
In the current configuration of the European market, gas determines the global price of electricity when it is used, as all producers receive the same price for the same product (electricity) when it enters the grid.
At the end of April, the governments of Portugal and Spain reached a political agreement in Brussels with the European Commission for the establishment of a temporary mechanism that will allow the average price of gas to be fixed at 50 euros per MWh.
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