Brussels tells Spain that the extension of the ‘Iberian exception’ cannot go beyond December

BRUSSELS, Jan. 20 () –

The European Commission has informed Spain and Portugal that the extension of the ‘Iberian exception’, through which both countries have been able to temporarily limit the price of gas for electricity production, cannot go beyond December 2023, date on which the temporary framework of support measures for the war in Ukraine expires, so as long as the European Union (EU) does not modify it, the extension of the mechanism must abide by it.

This was conveyed by the Vice President of Competition, Margrethe Vestager, to the Third Vice President of the Government and Minister of Ecological Transition and the Demographic Challenge, Teresa Ribera, and the Minister of the Environment and Climate Action of Portugal, Duarte Cordeiro, at their meeting this Wednesday, according to what diplomatic sources have confirmed to Europa Press.

This calendar was an element “suggested” by the Community Executive to the two countries, according to the sources consulted, but they do not clarify if, in addition to the term, the parties addressed other possible technical changes that could vary the price or operation of the mechanism.

In any case, the meeting on Wednesday between the ministers and the community vice president was the first contact at the political level to address an agreement that must now be worked out among the technical teams before submitting a formal notification to Brussels for its final decision in time for the end of the validity of the current permit, which expires on May 31.

Although on January 9 Minister Ribera announced her intention to request an extension of the ‘Iberian solution’ until May 2024, the same sources assure that Spain accepts the Brussels proposal as “very reasonable” and, likewise, Portugal he acknowledges that it would work for them too.

For their part, Commission sources specify that there is still no agreement between the parties to extend the mechanism, but that the meeting responded to a first informal meeting to begin to approach positions.

Both the extension of the mechanism and the deadlines are still pending approval by Brussels but, in the event of such a scenario, sources from the Ministry indicate that there is the possibility that the temporary framework of aid for the war in Ukraine will be extended and also allow an extension of the Iberian solution beyond December.

Another option is that the ‘Iberian exception’ ceases to be necessary if during the Spanish presidency of the Council, from July to December 2023, the reform of the electricity market is agreed, which is the main problem for Spain.

The ‘Iberian exception’, which has been applied in Spain and Portugal since June 15, is a mechanism that caps the price of gas for electricity generation in order to lower the price of electricity.

During the first six months of this measure, the price of gas was capped at 40 euros/MWh and, from there, it increases by 5 euros/MWh per month until May, when its validity ends.