Pressured by the evolution of gas and electricity prices and the fear of a social explosion in the streets, the European Union yesterday adopted a new package of emergency measures to intervene in the energy market and tackle the problem from different angles .
Firstly, European energy ministers yesterday pledged to "flatten the curve". They do not talk about infections but about electricity consumption and their objective is to reduce the peaks in demand that are registered at certain times and that in countries like Spain force more gas to be used to generate electricity. The political agreement sealed yesterday commits governments to a mandatory 5% reduction in their electricity consumption during peak hours.
As expected, the final text of the regulation includes flexibility measures to allow member states to define what those overtime hours are and how to meet the objective. The objective of the Spanish Government is to concentrate the bulk of the effort to reduce consumption in industry and large consumers, not in individuals, and for this it has approved the so-called interruptibility mechanism. The system, explained the vice president for the Energy Transition, Teresa Ribera, will be operational on November 1 and will allow Red Eléctrica to take measures to "flatten the curve" and "not have to look for more expensive solutions to guarantee supply".
This system allows the operator to call auctions to compensate consumers who agree, at a given time, to reduce their demand with a notice of only 15 minutes and for a maximum period of three hours. A reduction in electricity demand will ultimately result in lower prices for all consumers, assured Ribera.
The electricity saving plan will run from December 1, 2022 to March 31, 2023. Spain originally defended that all percentages of reduction in electricity consumption were voluntary but has endorsed the final commitment. The measure will be in force until June 30, 2023. Countries that wish to do so may reach a 10% cut in their global consumption, but this percentage is voluntary, not mandatory.
The second element of the agreed European regulation consists of a cap on the profits of companies that generate electricity with inframarginal technologies (that is, the cheapest that enter the market at the moment: renewable, nuclear and lignite) of 180 euros per megawatt hour. The figure is a maximum calculated based on the highest cost of electricity generation at European level, from lignite. and governments will be free to lower it.
The Spanish Government already established a similar measure last year but with a much lower threshold, 67 euros. Like all countries that already have or are in the process of approving similar initiatives, the regulation is flexible enough to allow them to maintain their own design, so Spain should not make changes to its national model. The same applies, as La Vanguardia advanced, to the tax on energy companies on which the Spanish Government is currently working. The political agreement reached yesterday by the ministers establishes a temporary "solidarity contribution" to tax 33% of the extraordinary profits of oil, gas and refinery sector companies, defined as those that exceed 20% of the average registered in the last four exercises.
