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

Judge throws out Maine lawsuit against COVID vaccine mandate

PORTLAND, Maine (AP) — A federal judge has dismissed a complaint from a group of health care workers who said they were unfairly discriminated against by Maine’s COVID-19 vaccine requirement. The plaintiffs sued Democratic Gov. Janet Mills and other Maine officials along with a group of health care organizations in the state. The workers argued […]
19 hours ago
Associated Press

Federal court rejects Mississippi student’s racial bias suit

JACKSON, Miss. (AP) — A lawsuit alleging a school district in a small Mississippi Delta town discriminated against a Black student and stripped her of an academic award has been dismissed by a panel of federal judges. Olecia James filed the federal lawsuit in 2019 against the Cleveland School District, claiming officials prevented her from […]
19 hours ago
Former Vice President Mike Pence speaks to reporters during a visit to the Iowa State Fair, Friday,...
Associated Press

Pence says he didn’t leave office with classified material

DES MOINES, Iowa (AP) — Former Vice President Mike Pence said Friday that he didn’t take any classified information with him when he left office. The disclosure — which would typically be unremarkable for a former vice president — is notable given that FBI agents seized classified and top secret information from his former boss’s […]
19 hours ago
(AP Photo/Richard Drew)...
Associated Press

Don’t dawdle with latest iPhone update. Here’s why and how

Apple released an upgrade Wednesday to close a security hole that could allow hackers to seize control of iPhones and several other popular Apple products.
19 hours ago
Associated Press

Construction set to begin on first US Coast Guard Museum

NEW LONDON, Conn. (AP) — Construction is set to begin on a long-awaited national museum that will honor the U.S. Coast Guard. A special keel-laying ceremony, a term that’s usually used to celebrate construction of a cutter, was held on Friday at the museum’s riverfront site in New London, Connecticut, about 40 miles south of […]
19 hours ago
Associated Press

3rd attempted murder charge filed in shooting of Indiana cop

RICHMOND, Ind. (AP) — Prosecutors have filed a third attempted murder charge against a man accused of shooting an eastern Indiana police officer in the head during a traffic stop and search for possible narcotics. The Wayne County Prosecutor’s Office filed the new charge against Phillip Matthew Lee, 47, of Richmond for shooting at a […]
19 hours ago

Sponsored Articles

...
Day & Night Air Conditioning, Heating and Plumbing

Ways to prevent clogged drains and what to do if you’re too late

While there are a variety of ways to prevent clogged drains, it's equally as important to know what to do when you're already too late.
...
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.
...
Carla Berg, MHS, Deputy Director, Public Health Services, Arizona Department of Health Services

Vaccines are safe if you are pregnant or breastfeeding

Are you pregnant? Do you have a friend or loved one who’s expecting?
Spain, Portugal sign off on plans to temper energy prices