Iberian gas price cap cut Spanish households power bills by 24.4% - study

At least 15 countries are proposing a cap on gas from all origins, including Russia, but Germany, which is the main buyer, is opposed for the time being. According to Esade business school, between June 15 and Aug. 31, as Spain sweltered under record heatwaves, households on a regulated tariff - not on the free market - saved 24.4% on their power bills versus a scenario in the same period with no cap.

The cap on the price of gas used in electricity generation in Spain resulted in an average saving in a family's power bill of 24.4% in the summer, the Esade business school said in a report published on Friday. Spain and Portugal in June forged an agreement with the European Commission to implement a new system to limit the price of gas and coal used in power generation, temporarily subsidizing fossil fuel plants’ power costs.

On Friday the bloc's energy ministers will discuss a Europe-wide gas cap similar to that adopted in Iberia, as they battle an energy price surge linked to falling Russian gas flows that is stoking record inflation and threatening a recession. At least 15 countries are proposing a cap on gas from all origins, including Russia, but Germany, which is the main buyer, is opposed for the time being.

According to Esade business school, between June 15 and Aug. 31, as Spain sweltered under record heatwaves, households on a regulated tariff - not on the free market - saved 24.4% on their power bills versus a scenario in the same period with no cap. The report projected the cost for an average Spanish household consuming 8 kWh per day had the cap not been introduced and found that with it, they would have saved around 69 euros ($67.41) during the period.

At least 10 million households in Spain are on a regulated tariff, so the total savings would have been 690 million euros, according to Esade's calculations. Energy Minister Teresa Ribera said in parliament on Wednesday that the cap had saved the average household 17 euros per month.

The report said however that when less renewable energy was generated, as happened in summer when there was less wind and rain, the gas cap produces an incentive to consume gas, which is contrary to the decarbonisation targets set by the EU. Electricity exports to France have soared, meaning that a country that is not financing the measure could have benefitted from it, said the report, a distortion that could spread to the rest of the bloc if the cap is approved elsewhere.

($1 = 1.0236 euros)

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