EU allows Spain and Portugal to extend gas price cap

The European Commission on Tuesday said it would allow Spain and Portugal to extend measures to cap electricity prices for consumers until the end of the year. Spain and Portugal set a price cap on natural gas used for power generation in the spring of 2022.

The European Commission on Tuesday said it would allow Spain and Portugal to extend measures to cap electricity prices for consumers until the end of the year. Spain and Portugal set a price cap on natural gas used for power generation in the spring of 2022. The joint scheme subsidised power costs for fossil fuel plants to bring down soaring electricity prices.

The governments pay the difference between the cap and the market price, which jumped following Russia's invasion of Ukraine. The commission said Spain and Portugal would gradually lift the price cap each month from it's current level of 56.10 euros per megawatt hour to 65 euros in December, to provide a "smooth and predictable phase-out" of the measure.

Spain and Portugal estimate the measure, which was set to expire on May 31, saved consumers in both countries around 5 billion euros ($5.5 billion) between June 2022 and January 2023. ($1 = 0.9072 euros)