Spain announces temporary cap on gas price for power plants

Energy minister Teresa Ribera said the cap would immediately lower costs for 37% of private individuals and 70% of industrial operations, and would benefit all consumers within a year. "Over the next 12 months we will have a special protection system in Iberia against a backdrop of major volatility," she said.

Spain's government on Friday announced a temporary cap on the reference price of gas used by power plants, in a move the energy minister said would immediately reduce costs for more than a third of private individuals and 70% of the industry.

European countries are struggling to manage surging gas and power prices, pushed higher by Russia's invasion of Ukraine, and to mitigate their impact on consumers' spending power. "Spain with this decision is leading a structural change in European energy policy," government spokesman Isabel Rodriguez told a press conference in Madrid.

The European Commission agreed two weeks ago to allow Spain and Portugal to initially cap prices at 40 euros per megawatt-hour, with the price limit projected to average out at 50 euros over the coming 12 months. Energy minister Teresa Ribera said the cap would immediately lower costs for 37% of private individuals and 70% of industrial operations and would benefit all consumers within a year.

"Over the next 12 months we will have a special protection system in Iberia against a backdrop of major volatility," she said. Spain and Portugal had convinced Brussels they should be allowed to manage their own electricity prices, which are often inflated by expensive fossil fuels even though Iberia has large amounts of renewable power and little interconnection with the rest of Europe.

Ribera said Brussels would give a final green light for the plan within 10 days.

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