March 21, 2023

The year 2023 has started with an eye on the electoral appointments that begin in spring. The electoral campaign is months away, since it does not start until fifteen days before the election day. However, all the political parties have already begun to pave the way and design strategies to convince their potential voters and the Government was not going to be less. The economic situation is one of the main concerns of the Spanish and the management of the Executive plays a role in finding a solution or at least containing it. However, given the uncertain scenario, conditioned by the war in Ukraine, the cap on gas is consolidated as the only way to avoid a new energy rise that is transferred to all types of products.

The Council of Ministers closed 2022 with a positive balance, in the words of its members, with good employment data and the lowest inflation in the euro zone, located at 5.8% of GDP in the month of December. This was a slight respite, after eleven months marked by escalating gas and electricity prices across Europe, in its effort to limit its reliance on Russian gas. The cap on gas has acted as a lifeline for Spain and Portugal since June; However, this will only be in force for twelve months, which makes it fearful that future scenarios may be appropriate in the event that the European Commission does not authorize its extension and the Russian president persists in his offensive.

The Minister for Ecological Transition and for the Demographic Challenge, Teresa Ribera, confirmed this Monday that the Government will propose to the highest European authorities that the ‘Iberian exception’ be extended until the end of 2024 and with a limit of between 45 and 50 euros, waiting for the electricity market reform to take shape. The Council of Ministers will specify this Tuesday the proposal that it will offer to Brussels for this modification, but Ribera believes that it will take “a long time”. Meanwhile, she has transmitted that the will of the Executive is that the Iberian countries “continue to benefit” from the mechanism, until the price of light is decoupled from gas.

It is not difficult to venture, as the person in charge of the energy portfolio points out, that the negotiation between the community countries could take months, so trusting in the reform of the electricity market to contain inflation in 2024 would be too risky. Therefore, having a limit on the price of gas for the production of electricity seems the most viable option. 180 euros per megawatt hour that the rest of the 27 have agreed upon, this appears as the best tool to avoid an unbridled escalation of prices.

The long-term option is investment in renewable energy, however this does not have such an immediate impact, so it is a medium and long-term plan. Ribera has also emphasized the importance of making investments in this regard. “We have to modify our electrical system with more renewables, more storage, more security for investors and much less volatility for consumers,” he insisted, something that the Government pursued with tax cuts and cost reductions in the transportation of electricity. .

Meanwhile, the Government has an important battle in Brussels to extend the gas price limit, especially so that it remains below that enjoyed by the rest of the partner countries, given that sticking to 180 euros/MWH would imply an increase of the prices of the electricity bill and, therefore, a new rise in the prices of the shopping cart, which have a direct impact on the pocket of the citizens, something that they will not overlook when they act as voters in the municipal, regional and regional elections. nationals of this 2023.

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