Spain and Portugal have sent their proposal on how to cap the price of natural gas used to generate electricity to the European Commission.
Spanish Socialist Party (PSOE) leader and PM, Pedro Sanchez. Credit: Pedro Armestre, AFP/Getty Images
Spain and Portugal have sent their proposal on how to cap the price of natural gas used to generate electricity to the European Commission.
“Yesterday afternoon, after weeks of technical negotiations, Spain and Portugal sent to Brussels the joint proposal on the mechanism to cap prices,” Spanish Prime Minister Pedro Sanchez said at the Cercle d’Economia conference in Barcelona on Friday. The premier said he hopes to get approval from the Commission soon in order to be able to start implementing the plan during the next few days.
Sanchez is relying heavily on the price cap plan to help him control a cost-of-living crisis, with inflation reaching the highest since the mid-1980s in March before slowing slightly in April. The government has said that a cap will have an immediate impact of inflation.
Soaring European energy costs, worsened by the war in Ukraine, prompted the Spanish premier to promise the price cap on gas to help limit the impact on electricity prices. While Spain and Portugal can generate a large part of their electricity using cheaper renewable energy plants such as wind farms, power prices are determined by the most expensive generation technology even if it only represents a smaller part of all output.
Earlier this year, European leaders gave Spain and Portugal an exception to be able to set the cap on gas prices. The Iberian countries only have small gas and power interconnections with the rest of Europe.
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