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Government estimates cap on gas price could reduce inflation by 5% or 6%

Mechanism for price capping gas It aims to reduce year-end inflation to a level of 5 or 6% for electricity…

By admin , in news , at May 18, 2022

Mechanism for price capping gas It aims to reduce year-end inflation to a level of 5 or 6% for electricity generation, besides providing substantial savings to energy consumers.

It has been speculated by government sources that it will also be emphasized that a correction will be made to calculate the rate. regulated marketThe so-called Voluntary Pricing for Small Consumers (PVPC), with the aim of providing greater stability, for which the Portuguese model is seen above all.

The executive had already published this Saturday the Royal Decree-Law, which established the mechanism for capping gas on average €48.8 per megawatt/hour (MWh) for a period of twelve months, thus covering the next winter, a period in which energy prices are more expensive.

A delimitation That the executive had already wanted to introduce in the anti-crisis decree, but it was “inexcusable” for Brussels to approve, has been called the “Iberian exception” and would mean, with immediate effect, a drop in the electricity industry. Large share (more than 80% of the clothing produced) and consumers of the regulated market.

in case of customer free marketThe same sources emphasize that its effect will gradually wear off, as it will be seen when the contract is renewed on an annual basis.

tackling inflation

in the areas of executive Express your satisfaction with the authorization of this limit on gas price, after a “sensible conversation” with The European Commission This allows a maximum price of 40 euros to be displayed for six months, which guarantees an average that allows for a large reduction in the bill, although it is less ambitious than that promulgated by Podemos, which has been holding gas for months. And betting on putting a strip of 30 euros.

But apart from these effects on the electricity bill, they from the coalition executive underscore the relevance of this measure to bring down inflation, thus avoiding reaching double-digit levels, something the government came close to. Problem Ukraine resulting from the crisis, and to be able to reduce the price trend throughout the year. As such, the objective is to be able to end the year in the range between 5 and 6%, as projected by the government sectors.

portuguese model

But they also elaborate that the agreement Brussels Another factor involved, which is the correction when setting the regulated market rate for 2023, is to separate it from the hourly price of the wholesale electricity market.

One aspect, which is also positive for these sources, is that it would provide the ability to “reduce volatility” of the price for this class of consumers, considering a constant average. tariff Without quarterly fluctuations, as it is at present.

In any case, tariff reforms for these government sectors PVPC will always guarantee lower prices than the free market and point to the Portuguese model as a mirror for making these changes, while promoting a more stable pattern for the realization of these consumers. So, the idea is to be able to implement this improvement at the end of the year and have it designed around autumn.

In turn, the sources consulted insisted on separating the gas price from the rest. technologies Production is meant to reduce ‘fallen profits’ from the sky for power companies, cutting a strong percentage of that overpayment associated with gas.

For this reason, they elaborate that compensation for combined cycle plants makes sense and compensates, noting that it will always be much less than the reduction in total cost and net savings Which is achieved with a gas cap.

Government estimates cap on gas price could reduce inflation by 5% or 6%

2022-05-18 06:21:38