The Government drops the Iberian mechanism, the cap on the price of gas that managed to contain it in the worst moments of the energy crisis last year. The third vice president and minister for the Ecological Transition, Teresa Ribera, has ruled out the possibility of requesting a new extension after revealing this Tuesday in Brussels that the European Commission, which had to authorize an extension of this tool beyond December 31, 2023 , would not give the green light.

“The extension of the mechanism, which in principle ends on December 31, requires an approval process by the Directorate General of Competition [of the European Commission], which has already made it clear that it understood that it was not possible to put it into practice beyond that.” “Ribera said at a press conference at the end of the Energy Council that he has given the green light to three other temporary emergency measures to weather the energy crisis: the fast track for the deployment of renewables, the joint gas purchasing platform and another limit, 180 euros/Mwh for gas.

In this way, Ribera has resolved the mystery regarding one of the decisions that he had to make before the end of the year, whether or not to request a new extension – which would have been the second – of the Iberian mechanism, which will expire at the end of anus. As he pointed out, in that case, he would not have obtained approval from the Commission. In recent weeks, the Ministry of Ecological Transition maintained that the decision whether or not to request the extension had not yet been made.. A spokesperson for the European Commission explained this Tuesday to 20 Minutes that the decision not to authorize an extension again dates back to April 25 of this year, when it authorized the first one, which would only be until December 31, and would not enter into 2024, as was already the Government's intention.

Beyond this date, adds the Commission, it will be up to Spain, like any other EU country, to decide whether it wants to support a specific sector of its economy with state aid such as the one that the Directorate-General for Competition approved when it gave birth. green to the Iberian mechanism for the first time, a decision taken “under European state aid rules” and worth 8.4 billion for Spain and Portugal to reduce the cost of generating electricity with gas. Specifically, the Spanish Government was authorized to help this sector with 6.3 billion, which corresponded to the estimate made of the so-called compensation that was attributed to all consumers.

Ribera wanted “until it was necessary”

In this way, Ribera's department distanced itself from the scenario outlined in statements by the vice president before the European Parliament last October, when she was in favor of capping the price of gas – and, therefore, that of the entire electricity – would remain in force “until it was necessary”, even if it was as a 'safety net', since since February, even before it was extended in May, it has not been necessary to activate this tool because the price of gas It has always been below the progressive threshold that was set for each month.

This Tuesday, from Brussels, Ribera once again referred to this reality, that the Iberian mechanism has not had to enter the scene for a long time, not to defend it as a reinsurance in case the price shoots up again, but to try to justify the Commission decision not to authorize another extension. “Gas prices have stabilized well below those we experience in 2022, which explains why this mechanism has not been activated since February,” he recalled.

Contain the price

In this way, on December 31, an extraordinary tool that managed to contain the price of electricity in Spain and Portugal during the worst months of the energy crisis will expire, in which historical peaks were reached due to the rise in gas prices due to the war in Ukraine.

Its mere creation represented a diplomatic milestone for the Government in Brussels and, after more than two months waiting for its final authorization, it was activated for the first time on June 15, 2022.. The Iberian mechanism limited the price of electricity generated with gas, and with it, that produced with cheaper technologies – particularly renewable – that are dragged down by the highest value in the EU electricity market, of marginal type.. In exchange, compensation would be paid only for the real price of gas to the plants that generate electricity with it, but not to the rest.. This solution, which contained prices for months, also meant spending billions in compensation and coincided with greater gas consumption, which the Government justified by electricity exports to France and Portugal and the PP or the electricity sector explained by the mere existence of the Iberian mechanism.

Although it did not serve to return to normal prices that at that time were out of control, the cap on gas did ensure that electricity of renewable or nuclear origin, cheaper than gas, was not paid as expensive as with this raw material.. As a result, it contained prices better than other European countries, such as France, Germany or Italy.

In October 2022, gas began to go down – and the cap threshold to rise, at a rate of five euros/Mwh per month – and there were days when it did not have to be applied, as also happened when there was so much renewable energy that it was not necessary. the gas. This situation became a constant since February of this year, because since then the mechanism has not been activated again.. By then, the Government had already obtained authorization from Brussels to extend it for the first time – it expired in May and was extended until the end of this month – but Ribera defended it as a “safety net”, in case it was necessary again.

Less than two months ago, the vice president maintained this vision, that the Iberian mechanism could last as a security measure. “My natural inclination is that, given that it has not generated distortions and has worked well, all measures should be extended until when necessary,” he said on October 25.. The next day, he reinforced the idea by ensuring that he would defend it in the EU Council, where he will chair the meetings of Energy Ministers until December 31.

However, this will not be the case because the Commission has made it known that it will not authorize a new extension of a mechanism that, in the end, is state aid to the Spanish and Portuguese energy industry.