Temporary measure to lower wholesale electricity prices in Spain

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1. A temporary mechanism is created to reduce the wholesale electricity price by adjusting the costs of power plants that use fossil fuels. It will last 12 months and, in no case, beyond May 31, 2023.
2. The mechanism applies in peninsular territory to natural gas combined-cycle plants, coal plants, and certain gas-fired cogeneration facilities.
3. The adjustment equals the difference between a reference gas price and the actual market gas price. The reference price starts at €40/MWh, rises by €5/MWh each month from the seventh month on, and reaches €70/MWh.
4. Consumers who benefit from the reduction pay the cost of the adjustment, shared among them. Those with forward hedging contracts signed before April 26, 2022 are exempt, as are storage and auxiliary generation services.
5. Additional congestion revenues on the electricity interconnection between Spain and France are used to lower the total cost of the mechanism.
6. Manipulating offers to take advantage of the mechanism, or providing false hedging data, counts as a very serious offense under the Electricity Sector Law.
7. The PVPCPVPC The regulated small-consumer electricity rate, whose price changes every hour. (regulated small-consumer electricity price) is reformed so its calculation also includes forward market prices, aiming to reduce its volatility. The new formula could take effect in early 2023.
8. The asylum law is also amended to allow the new reception system through 'acción concertada' (concerted action agreements), with advance payments to partner entities. The rule takes effect the day after publication, but the electricity mechanism starts once the European Commission authorizes it.

Who it affects

• Electricity consumers on the peninsula, especially those on the PVPC rate: They pay part of the adjustment cost, although their final electricity price is still lower than without the measure.
• Peninsular gas, coal, and cogeneration plants: They receive the adjustment for the energy they sell in the market and must include it in their offers.
• Electricity retailers and direct market consumers: They must declare their forward hedges to be exempt from the adjustment payment and provide guarantees.
• Sponsors of South Summit 2022-2024: They can benefit from tax breaks as an event of exceptional public interest.
• Entities serving asylum applicants: Concerted action agreements are regulated for providing reception services, with advance payments.

Words worth knowing

Mercado mayorista (wholesale market)

The market where power plants sell their electricity and where the base price of power is set.

PVPC

The regulated small-consumer electricity rate, whose price changes every hour.

Cobertura a plazo (forward hedge)

A contract that fixes the future price of energy in advance to protect against price increases.

Rentas de congestión (congestion revenues)

Money generated when the power grid between two countries lacks enough capacity for all the energy that wants to be exchanged.

Acción concertada (concerted action)

A scheme by which the government authorizes private or nonprofit entities to provide a public service, such as refugee reception.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries