Spain, Portugal to approve cap on gas price on Tuesday, PM Costa says

LISBON – The governments of Portugal and Spain will decree on Tuesday the introduction of a Brussels-backed temporary cap on reference prices of natural gas and coal used by power plants, Portuguese Prime Minister Antonio Costa said on Monday.

The European Commission agreed two weeks ago to allow the Iberian nations to initially limit cap prices at 40 euros per megawatt-hour, with the price limit projected to average out at 50 euros over the coming 12 months.

European countries are struggling to manage surging gas and power prices, pushed higher by Russia’s invasion of Ukraine, and to cushion their effect on voters’ spending power.

Spain and Portugal had convinced Brussels that they be allowed to manage their own electricity prices, which are often set by expensive fossil fuel even though Iberia has large amounts of renewable power and little interconnection with the rest of Europe.Costa said that after poring over the technical details, the Commission on Monday gave the final go-ahead to the plan “in order to avoid the contamination of the electricity price by the gas price increase”.

“Spain’s cabinet usually meets on Tuesdays and we are going to hold an extraordinary cabinet meeting for the measure to come into effect simultaneously throughout the Iberian Peninsula,” Costa told reporters in Strasbourg.

Spain’s energy ministry did not immediately respond to a request for comment.

The measure limits the price of gas purchased by thermal plants, including gas plants, co-generation sites and coal plants, and is designed to preserve the integrity of the EU energy market and maintain incentives to shift to cleaner energy.