Brussels opens to extend the Iberian mechanism until December

Brussels opens to extend the Iberian mechanism until December

The European Commission welcomes the extension of the so-called Iberian mechanism beyond May 31, when it is scheduled to expire, but with the current regulatory framework it can only be extended until December 31.

It is the message that the community executive transmitted this Wednesday to the vice president for the Ecological Transition, Teresa Ribera, and the Portuguese Minister of Industry, Duarte Cordeiro, explained several diplomatic sources this Friday, after both traveled to Brussels this week to defend the renewal of this exception to the pricing system in force in the rest of Europe which, by partially decoupling the price of electricity from gas, has resulted in large savings in both countries. Formally it has not yet been requested but it will be done shortly.

The Vice President of the European Commission and Head of Competition, Margrethe Vestager, explained to the Iberian representatives that the mechanism was approved within the time frame of state aid agreed upon in response to the war in Ukraine and that, given that these provisions expire at the end of the year, in principle it can only be renewed until then.

Another possibility: that during the second half of the year the Twenty-seven agree to reform the electricity market

Although Ribera has defended an extension of the 12-month Iberian cap, sources from the Ministry for Energy Transition see the European Commission’s approach as “very reasonable”. The Government sees it possible that this temporary aid framework is extended, so that “an eventual Iberian exception would also be extended.” Another possibility, these sources point out, is that during the second half of the year the Twenty-seven agree to reform the electricity market. In that case, “if this reform were achieved, the Iberian solution would be unnecessary,” they argue.

Spain will assume the reins of the presidency of the Council of the EU on July 1. It will be the last full semester to negotiate agreements before the dissolution of the European Parliament for the holding of elections in the spring of 2024 and the Government considers among its priorities to carry out a reform of the electricity market more in line with the current reality, so as to reduce or decouple gas from the formation of the price of electricity and consumers benefit from cheaper production from renewable sources.

The war has sharply accelerated the EU’s plans to stop depending on Russian gas and, in light of the 2022 price crisis, Brussels has opened up to the idea of ​​”differentiated contracts”, based on the cost of generation. of each technology but it will not be until March when he presents his proposal and the details of the new system are known. The Spanish government has already sent its views to Brussels, more radical in terms of the scope of the reform. The dossier promises to be one of the great political battles of 2023 in the EU.

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