Starting from the 14th of this month the price of electricty will begin to come down as the EU has given the green light to put a cap on gas.

The pricing of electricity is based on the price of natural gas, which is the most expensive way of generating electricity, so no matter how the electricity you consumed was generated, be it wind or hydro, it’s charged at the price of the most expensive form; gas.

This is why the article headline speaks of gas even though it is about the price of electricity.

Spain and Portugal argued before the EC that the Iberian Peninsular is an “energy island” meaning that it is isolated from rest of Europe, so that if these two countries put a cap on the price of gas, it would not affect other EU members.

Consequently, starting on the 14th the ‘energy pool,’ will decline to the 40 euros per megawatt hour – yesterday, by comparison, it stood at 85 euros/mwh.

However, it won’t be until July when consumers will notice the change in their electricity bill, because each utility company commences their billing period starting on different dates.

Minister Teresa Ribera, explained that this system, which will be in place for a year, more or less, will mean that consumers will see savings of between 15% and 20% on their monthly bills.

According to the EC, this measure will mean that the government of Spain will have to pay out 8,400 million in aid, whilst Portugal will have to pay out 6.3m.

The Minister hopes that this will bring inflation down by between 0.8% and 1.0%. At present, inflation stands at 8.7%, according to the INE (Instituto Nacional de Estadística). Indications are that 70% of the present inflation rate has been generated by the price of energy (electricity & fuel).

Editorial comment: at least the Government is no longer trying to blame the price of electricity on the war in Ukraine.

(News: Spain)