Socialist Spain Sets Gas Price Caps in Attempt to Prop Up Economy

The Spanish leftist government, along with neighbouring Portugal, have moved to cap gas prices at 50 euros per megawatt-hour in a bid to reduce growing electricity costs for citizens and businesses.

Both Spain and Portugal announced Tuesday that they have reached an agreement with the European Commission to launch a new mechanism to reduce the price of electricity over a twelve-month period by setting an average price of gas and coal to 50 euros per megawatt-hour (MWh).

Spain’s Vice President of the Government Teresa Ribera commented on the new policy saying, “It is a very important agreement for consumers, domestic and industrialists.”
“It is a system that, with the Iberian exception recognised by the European Council, will allow us to ensure that the price of electricity does not rise on the spot market as a result of the price of gas and will allow industrial consumers to benefit from this reduction in the reference and prices in the future,” she added, newspaper El Mundo reports.

“It is a good agreement that protects us against turbulence, against increases in the price of gas in the coming months,” Ribera said. Currently, the price of gas stands at around 90 euros per MWh.

“In line with the conclusions of the European Council of 24 and 25 March, the Commission supports the efforts of Spain and Portugal to help the economy in a context of high energy prices across the EU following Russia’s unjustified attack on Ukraine,” a statement from the office of EU Commissioner Margrethe Vestager said.

Initially, both Spain and Portugal had called for the EU to agree to a 30 euro per MWh price cap but the proposal was rejected by Brussels. The new policy is expected to come into force as early as next week.

The move is just the latest by the Spanish government to ease the burden of inflation and rising energy costs for consumers and businesses as a result of the Russian invasion of Ukraine.

In March, the government announced it would be reducing the cost of petrol by 20 cents per litre as part of a €16 billion (£13.4 billion/$17.5 billion) plan to offset rising costs.

Follow Chris Tomlinson on Twitter at @TomlinsonCJ or email at ctomlinson(at)breitbart.com.