However, a new concept is incorporated into the invoice, the difference between the ‘capped’ price of gas and the real one, and that difference could be greater than the savings of the measure. The gas reference price established in the mechanism will be variable, beginning with a value of €40/MWh during the first six months and increasing in successive monthly steps of €5/MWh until reaching a value of €70/MWh in the last month.

“According to some preliminary calculations, initially the consumers who are going to have to pay the difference in the price of gas they will have to assume an extra cost that will be higher than the savings promised by the Government“, he explains to EL ESPAÑOL-Invertia, Javier Colón, expert in electricity markets and founding partner of the consulting firm Neuro Energía.

“Later, when the rest of the consumers in the free market gradually join as their contracts come to an end, they will also have to assume that cost on their bills,” he adds. And from there, the savings will begin to be noticed.

This is how it appears in the draft of the Royal Decree Law to which EL ESPAÑOL-Invertia has had access. “The total cost of the adjustment to marginal technologies will be distributed among that part of the Iberian demand that will benefit directly from it”, and points out that “either because it acquires energy at a price directly referenced to the value of the wholesale market or because it has signed or renewed a contract already taking into account the beneficial effect of the mechanism on wholesale prices”.

Role of the marketers

Those responsible for incorporating this cost due to the difference in prices will be the marketers. So, electricity companies must provide the “detailed” information of their contracts ‘retail‘, “not those signed between generation and marketing, but the real contracts that consumers pay,” said Ribera.

In this way, it will be controlled that this volume of “benefits is no longer paid by consumers”, and they will have to prove to the OMIE (operator of the Iberian energy market) and the CNMC that what they present is true.

From the entry into force of the Royal Decree Law, which does not apply the mechanism, the marketers will have a period of five days to offer a “fixed picture” of what is your market demand exposed to the ‘spot’ market and which part has hedges or fixed contracts.

Households and industries

The government does not see it that way. According to Third Vice President and Minister for the Ecological Transition, Teresa Ribera“will mean an immediate improvement for 37% of domestic consumers and 70% for industrial consumers”.

His decision to intervene in the electricity market ‘bumping’ gas has few antecedents, or none in the past, as he assured in the press conference after the approval of the ‘Iberian exception‘.

“It will first affect consumers indexed to the pool, to industries and then to those with fixed contracts when they have to renew or change.”

futures market

The decision, which was announced days ago, had immediate repercussions in the derivatives and term markets. In fact, the price of futures has fallen in the Iberian market to 160 euros/MWh in a few hours for the coming months, when weeks ago they exceeded 250 euros/MWh.

If you did not believe it then, now the expectations of reductions in the electricity price of the Iberian exception apply. And above all, it contrasts with the soaring prices of the futures market in France, which presents prices above 500 euros/MWh, or in Germany, close to 300 euros/MWh.

“It is expected that electricity exports from Spain to France multiply. The interconnections will have a net export balance“, ministerial sources have assured. And precisely the Government will take advantage of what is known as ‘additional congestion rent’ to obtain extra income.

“The difference in prices between France and Spain will allow the energy that is exchanged to be returned to the system operators of each country, which will serve to invest in the improvement of the networks,” they have detailed.

Futures markets are an electrical price signal to both buyers and sellers. It allows them to manage risks and plan daily energy deliveries. They reflect the daily market price that is expected at a future date. As in the formation of prices in the daily market, the concept of the opportunity cost.


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