Spain, Portugal sign off on plans to temper energy prices

May 13, 2022, 6:26 AM | Updated: 8:45 pm
FILE - Operators work at Enagas regasification plant, the largest LNG plant in Europe, in Barcelona...

FILE - Operators work at Enagas regasification plant, the largest LNG plant in Europe, in Barcelona, Spain, Tuesday, March 29, 2022. The Spanish government on Friday approved a new plan aimed at reining in soaring energy prices, signing off on a temporary cap on natural gas prices that it said would immediately reduce costs for a third of domestic consumers and 70% of industry. (AP Photo/Emilio Morenatti)

(AP Photo/Emilio Morenatti)

MADRID (AP) — Spain and Portugal on Friday signed off on a temporary cap on natural gas prices, in a coordinated move described by Portugal’s environment minister as an “unprecedented” bid to temper soaring energy prices and inflation.

As energy prices surge across Europe, exacerbated by Russia’s war in Ukraine, Spain and Portugal joined forces earlier this year to ask the European Union’s executive arm to allow them to skirt the bloc’s common-market rules.

Citing the large amounts of renewable energy used in both countries and their scant connections with the European power grid, the European Commission agreed to allow a price cap on gas used for power generation, averaging around 50 euros ($52) per megawatt-hour for the next 12 months.

Spanish Minister for Ecological Transition Teresa Ribera said the measure would protect consumers and businesses as Europe grapples with volatile energy prices that are driving record inflation.

The cap is expected to immediately reduce costs for a third of domestic consumers and 70% of industry, she added.

“For the first time, it’s not the usual people paying for this,” Ribera said. “The measures adopted are fundamentally aimed at reducing the extraordinary profits of energy companies so that this adjustment benefits all of us.”

She did not provide further details on how the plan would be funded.

In Portugal, Duarte Cordeiro, the minister for the environment and climate action, said the measure would capitalize on “unexpected” windfalls in the system to reduce prices.

“This is an unprecedented measure, a mechanism with a set of very clear goals. Firstly to stop the escalation of prices, secondly to protect those who are more exposed and thirdly, to socialize the costs and benefits.”

The joint plan will now go to European Commission to get the final go-ahead, Ribera added, and was expected to take effect fully in the coming weeks.

Energy companies in Spain have criticized the plan, citing concerns that the new rules will distort the market. José Bogas, the chief executive of Spain’s Endesa, said the cap on prices could result in an increase in gas consumption.

“That is the opposite of what is intended,” he said on a conference call with analysts earlier this week.

In late April, after news broke that the European Commission was considering the proposal from Spain and Portugal, the CEO of Spanish power utility Iberdrola, Ignacio Sánchez Galán, called for the EU to instead seek a common solution. Speaking during an analyst call, he described the idea of an exception for Iberia as “unjustified and contrary to the single market.”

Prices for energy have been steadily climbing in Spain since last year, said Ana Maria Jaller-Makarewicz, an analyst who focuses on Europe for the Institute for Energy Economics and Financial Analysis. “It’s one of the highest prices in Europe … they have to protect consumers.”

It remains to be seen how exactly the cap will ultimately impact energy prices or whether the governments or companies will end up covering the costs of the cap, she added. “It depends on how they manage it now.”

—-

AP reporter Helena Alves reported from Lisbon.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Associated Press

West Africa leaders lift sanctions on military-led neighbors

ACCRA, Ghana (AP) — West African leaders attending a regional summit Sunday lifted sanctions against three neighbors led by military governments that are now promising a return to democratic rule. The summit of the Economic Community of West African States resolved to lift all economic and financial sanctions imposed on Mali, Guinea and Burkina Faso, […]
14 hours ago
People evacuated from the Field's shopping center gather outside,  in Orestad, Copenhagen, Denmark,...
Associated Press

Several dead in Copenhagen mall shooting; suspect arrested

COPENHAGEN, Denmark (AP) — A gunman opened fired inside a busy shopping mall in the Danish capital on Sunday, killing several people and wounding several others, police said. A 22-year-old Danish man was arrested after the shooting, Copenhagen police inspector Søren Thomassen told reporters, adding there was no indication that anyone else was involved, though […]
14 hours ago
German Foreign Minister Annalena Baerbock, briefs the media after a meeting with her counterpart fr...
Associated Press

Germany, Ireland slam UK move toward overriding Brexit deal

LONDON (AP) — Germany and Ireland have condemned the U.K government’s move towards unilaterally rewriting parts of the post-Brexit deal with the European Union. German Foreign Minister Annalena Baerbock and Irish counterpart Simon Coveney said there was “no legal or political justification” for overriding the agreed trade rules in Northern Ireland. Writing in British newspaper […]
14 hours ago
FILE - California Gov. Gavin Newsom discusses the recent mass shooting in Texas during a news confe...
Associated Press

‘Join us in California’: Newsom targets GOP in Florida ad

SACRAMENTO, Calif. (AP) — Gov. Gavin Newsom is running for reelection in California, but his latest television ad is airing in Florida. The 30-second spot scheduled to air on Fox News starting Monday takes shots at Florida Gov. Ron DeSantis and his policies, while drawing a contrast with California. “Freedom, it’s under attack in your […]
14 hours ago
Associated Press

Police: Man shot was unarmed, officers feared he would fire

AKRON, Ohio (AP) — A Black man shot and killed by Akron police officers in a hail of bullets following a vehicle and foot pursuit was unarmed at the time of the shooting, but a shot appeared to have come from the vehicle during the pursuit, and officers said they feared he was preparing to […]
14 hours ago
Associated Press

Shark attacks Long Island lifeguard during training exercise

FIRE ISLAND, N.Y. (AP) — Suffolk County officials closed a Long Island beach to swimming Sunday after what they described as an unprecedented shark attack that injured a lifeguard. The lifeguard had been playing the role of a victim during a training exercise when the shark bit him in the chest and hand, Suffolk County […]
14 hours ago

Sponsored Articles

...
Dr. Richard Carmona

Great news: Children under 5 can now get COVID-19 vaccine

After more than two years of battle with an invisible killer, we can now vaccinate the youngest among us against COVID-19. This is great news.
...
Day & Night Air Conditioning, Heating and Plumbing

Most plumbing problems can be fixed with regular maintenance

Instead of waiting for a problem to happen, experts suggest getting a head start on your plumbing maintenance.
...
Christina O’Haver

BE FAST to spot a stroke

Every 40 seconds—that’s how often someone has a stroke in the United States. It’s the fifth leading cause of death among Americans, with someone dying of a stroke every 3.5 minutes.
Spain, Portugal sign off on plans to temper energy prices