After yesterday's approval from the European Commission to the so-called "Iberian exception", The Ministry for the Ecological Transition and the Demographic Challenge has published Order TED/517/2022, of June 8, which determines the date of entry into force of the production cost adjustment mechanism for the reduction of the price of electricity in the wholesale market regulated in Royal Decree-Law 10/2022, of May 13, and by which the decision of the European Commission authorizing said mechanism is publicized.

This mechanism will begin to be applied in the auctions of the Iberian electricity market as of June 14, and will be in force for one year, until May 31, 2023. It is estimated that it will mean an extra aid of 8,400 million euros (6,300 million in Spain) to electricity producers in coal-fired power plants, combined cycle natural gas plants, as well as cogeneration plants that do not receive specific remuneration. During the validity of this mechanism, the aforementioned generators will receive a supplement on the electricity fed into the network, which will help them defray the costs of purchasing fuel. To the same extent, these producers will have to reduce their offers to the electricity market, known as the pool, so it is expected that the matching prices of the electricity market will fall and thus benefit consumers, especially those who buy electricity directly in the market, or whose contracts are referenced to the pool.

The supplement that producers will receive will be calculated each day by taking the difference between the prices marked by the Iberian Gas Market (MIBGAS) and the cap set in Royal Decree-Law 10/2022, which on average will be around €48/MWh, starting in the first semester at €40/MWh and gradually increasing. This difference in gas prices will be transformed into the supplement that will be charged for the sale of electricity by applying the average electrical performance of the combined cycles. The amount of this benefit will be paid with the invoices of the consumers in the resellers with contracts indexed to the pool and those covered by the PVPC or regulated market.

You can consult the full legal text at the following links:

https://www.boe.es/diario_boe/txt.php?id=BOE-A-2022-7843

https://www.boe.es/diario_boe/txt.php?id=BOE-A-2022-9435