NewsEuropeHouseholds covered by the regulated market saved 200 euros in the first six months of the Iberian exception

Households covered by the regulated market saved 200 euros in the first six months of the Iberian exception

View of a combined cycle plant in Escombreras (Murcia).

Without the Iberian exception, electricity would have been almost 32% more expensive in the second half of last year. Each household covered by the regulated rate saved, on average, 209 euros in that period, according to calculations presented this Thursday by EsadeEcPol, the public policy center of the business school of the same name. As there are around nine million families covered by the regulated market, the drop attributable to the Iberian exception amounts to almost 1,900 million euros. Savings have been increasing over the months: until the end of August, the reduction due to the measure was around 24%, eight points less than at the end of 2022.

The savings obtained by households have made it possible to substantially reduce inflation: without it, the Consumer Price Index (CPI) would have averaged 8.7% last year, 0.3 percentage points more than its final reading. “The best situation in Spain can be attributed to this measure. (…) It has been decisive”, detail the four authors of the study, Manuel Hidalgo, Natalia Collado, Jorge Galindo and Ramon Mateo.

The drop in the CPI attributable to the Iberian exception has also been progressive: more pronounced in the most vulnerable households (who allocate a greater fraction of their income to the electricity bill) than in the more affluent. The recent change in the index calculation methodology, however, will largely eliminate this positive —statistical— effect on inflation, by also allowing for free market contracts and not just those of the regulated market, as was the case up to now. . “The Iberian mechanism has made it possible to equalize the inflation rates supported by households with different economic capacities”, summarize the Esade technicians.

The measure, popularly known as the gas cap, consists of preventing combined cycles and coal and cogeneration plants from pushing up prices in the electricity market as a whole, in exchange for compensation for their owners. This adjustment —which is paid by Spanish electricity consumers themselves, whether or not they benefit from the measure— is included in the net benefit calculated by the business school. The Government has already asked Brussels to extend the mechanism beyond May, when it expires.

higher gas consumption

The negative side of the Iberian exception must be found, according to EsadeEcPol, in the greater consumption of gas to generate electricity and in the increase in exports to France, “with the consequent risk of subsidizing its consumers at the expense” of the Spanish. “The incentive for greater use of this energy source would continue to exist, with the consequent conflict between the objective of saving on household bills and that of general gas savings,” reads the text published this Thursday.

This greater consumption of gas to generate electricity has, however, some notes. “In the last months of the year, it seems that its use for the combined cycle has come a little closer (without being equal) to what would have been expected without a cap on gas.” In other words: “The greatest increase was located in the summer months, which suggests that the impossibility of resorting to sources such as hydroelectric power due to the drought in those months could influence the extra recourse to gas.”

In the event that the Spanish and Portuguese authorities had not removed the Iberian exception from Brussels, the Esade technicians confirm that the price on the Spanish market “would have been slightly higher than the French one at almost all times since mid-September”. A difference that leads them to think that the high export rates registered last year — historically, Spain has been a net buyer of electricity through its interconnection with France, but the tables have turned, and in what way, in a 2022 marked by the stoppage of the French nuclear power— “could be partly due to the lower price of electricity in Spain thanks to the compensation paid by Spanish households.”

structural debate

In the middle of a crossroads of opinions between capitals on the future architecture of the European electricity markets, EsadeEcPol warns against a potential loss of focus regarding the necessary substantive discussion. “Measures such as the cap on gas respond to the urgency of the situation in an apparently agile manner, but they also occupy a space that could precisely correspond to the structural changes at both a Spanish and European level, even if structural reform and specific action are not incompatible on paper”, they slide, while calling to “avoid patches posing as foundations, no matter how convenient, effective or unavoidable” they may be. “The feeling of effectiveness in the short [plazo] Without specific data, it feeds the incentive of political decision-makers to support measures that were initially considered temporary”.

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