Tuesday, June 28 2022 Sign In   |    Register

News Quick Search



Front Page
Power News
Gas News
Today's News
Yesterday's News
Week of Jun 27
Week of Jun 20
Week of Jun 13
Week of Jun 06
Week of May 30
By Topic
By News Partner
News Customization


Pro Plus(+)

Add on products to your professional subscription.
  • Energy Archive News

    Home > News > Gas News > News Article

    Share by Email E-mail Printer Friendly Print

    Customers will pay close to four euros on their bill for the gas cap on electricity

    May 22, 2022 - CE Noticias Financieras


      Spain is finalizing the cap on the price of gas in combined cycle power plants to decouple the volatility of the raw material in electricity. Just over a week ago, the Government called an extraordinary Council of Ministers to approve the new measures aimed at reducing "between 30% and 40%" of users' bills.

      However, despite the fact that gas will be limited to 50 euros MWh in this technology, electricity generators will have to buy the raw material at market price, which will mean a gap that will have to be paid by the demand, i.e., the customers. This figure, according to the Ministry of Ecological Transition, will mean that the megawatt per hour coming out of the combined cycles will not exceed 130 euros.

      However, the energy sector insists that "the real cost will exceed this figure" and it will have to be the compensation mechanism that will be in charge of paying this extra cost. According to sources consulted by this newspaper, the preliminary estimate is that the gap between the real price of generation and the one that will come out of the market, initially "would cost about 26-30 E/MWh, which will gradually increase to a maximum of about 40-44 E/MWh in September-October (higher expected gas prices, more production of the cycles)".

      The same sources insist that by the spring of 2023, the cost per megawatt per hour will be reduced "when the reference price of gas will be higher and the demand that contributes to financing will be greater".

      And what does this change in figures mean for consumers' bills? Well, according to the same figures handled by the sector, a user will pay between 4 and 6 euros, according to the first preliminary calculations handled by the marketers.

      The sector estimates that the average annual electricity consumption per household is 3,487 kWh, which implies an average monthly consumption of 291 kWh per household. In other words, about 3.2 MWh per year. The companies' calculations are based on the fact that each bill will generate some 102 euros, which will be allocated to the compensation mechanism, and this formula will be spread over a period of 24 months.

      More savings than what will be paid for compensation

      All in all, the Executive of Pedro Sánchez indicates that the savings generated by the measure of capping gas in the electricity market will be "much higher" than the costs generated by the measure. In this sense, it is worth remembering that the energy sector estimated the extra costs that the demand will have to face between 5,000 and 6,000 million euros. Specifically, the latest figure was made public by Endesa's CEO, José Bogas, during the shareholders' meeting held recently.

      As mentioned above, the Government considers that the electricity bill will be reduced by "between 30% and 40%" immediately. According to calculations by the consumer organization Facua, the average bill for a Spanish family has climbed to 140 euros per month. Therefore, the Ministry of Ecological Transition estimates that the bill will be reduced to around 100 euros.

      With these figures, and despite the fact that Spaniards will pay between four and six euros, according to industry estimates, Spaniards will have a net saving of 36 euros per month, by deducting the four euros from the 40 euros promised by the Government per average bill.

      By capping gas, the contagion effect is reduced, and the overall price of electricity is automatically lowered, since this energy is the most expensive and in the marginalist pricing system, it is the one that ends up setting the final price. This directly affects consumers with regulated tariffs, the PVPC, who are governed by the prices that come out of the electricity auction, the so-called electricity pool, which determines the units of electricity to be produced and their prices to cover the demand for each hour of the day.

      The reduction in the capping of gas in the combined cycles is still pending the final approval from Brussels, although it is true that these are bureaucratic steps since the bulk of the document has already been approved. According to ministerial sources, the Government hopes that by the end of next week it will receive the go-ahead and that Teresa Ribera will be able to give the order to limit the price of the raw material to reduce the cost of electricity.


    Other Articles - International


       Home  -  Feedback  -  Contact Us  -  Safe Sender  -  About Energy Central   
    Copyright © 1996-2022 by CyberTech, Inc. All rights reserved.
    Energy Central® and Energy Central Professional® are registered trademarks of CyberTech, Incorporated. Data and information is provided for informational purposes only, and is not intended for trading purposes. CyberTech does not warrant that the information or services of Energy Central will meet any specific requirements; nor will it be error free or uninterrupted; nor shall CyberTech be liable for any indirect, incidental or consequential damages (including lost data, information or profits) sustained or incurred in connection with the use of, operation of, or inability to use Energy Central. Other terms of use may apply. Membership information is confidential and subject to our privacy agreement.