The European Commission has given the green light to the joint proposal from Spain and Portugal to put a cap on natural-gas prices.

This will have a beneficial effect on the price of electricity, because of the present system where electricity, no matter how it is generated, is charged at the dearest production price; i.e., gas-powered generation stations.

This approval from the E.C. comes a month and a half after the proposal was set before the Commission. Afterwards the proposal had to be modified in order to conform with EU regulations and the demands made by other EU members before it was accepted.

The next step is that the Spanish Board of Ministers will have to approve a Decree that sets the conditions and technical details of a measure that is far more complicated than first expected; i.e., cap the price of gas on the wholesale market at 40 euros per mega-watt hour. There will then be a period fo 12 months to reach 50 euros per MWH, which is the minimum amount that the EC would accept.

When you take into consideration that electricity prices stands between 130 and 140 euros/mwh, at present (not to mention when it was over 200 euros per mwh) it means that the cost will drop by around 35%.

However, some Government sources doubt that the Executive will be able to put it into play today when the Board of Ministers takes place.

Whatever the case, consumers won’t notice a difference until next month because the billing cycle that electricity providers use will miss the measure coming into force.

(News: Spain)