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Spain and Portugal get ‘special treatment’ from EU leaders to keep electricity prices low – POLITICO

Spain and Portugal got the right Friday to take temporary, unilateral measures that could breach EU electricity market rules to ease pressure on electricity prices.

The decision came at the end of a lengthy EU summit where the issue of energy – how the EU buys it and how much it pays for it – kept leaders in talks late into Friday.

“The Iberian Peninsula has a very special situation … with a high load of renewable energy and with very few interconnectors,” said European Commission President Ursula von der Leyen at her final press conference, stressing that these peculiarities are too exceptional high electricity prices in Switzerland.

According to the final conclusions Endorsed by EU leaders at the summit, the Commission will “urgently assess the compatibility of the temporary emergency electricity market measures notified by Member States”. Brussels will ensure that EU governments do not unfairly exploit any measures that have been adopted.

Leaders also agreed on joint gas purchases for the first time – an attempt to use their collective market power to drive prices down.

The current EU electricity system links the price of electricity to the most expensive fuel needed to meet demand. Lately it’s been gas, and that’s led to consistently high electricity prices. The situation worsened when Europe tried to cut off gas imports from Russia, a major energy supplier to the continent.

Some leaders, particularly from southern Europe, at the summit pushed for more permanent changes in market structure – such as ‘unbundling’ gas from the market or imposing a cap on electricity or gas prices. However, these attempts have met relentless opposition from countries like Germany and the Netherlands, which are staunchly opposed to market intervention.

As it proved impossible to find a permanent solution for the whole bloc, Madrid and Lisbon pushed for temporary authorization to introduce some measures themselves. At a joint press conference, Portuguese Prime Minister António Costa and Spanish Prime Minister Pedro Sánchez said they were “satisfied” with the outcome of the talks, adding that they would present their national measures next week.

The European Commission will now examine how the bloc’s energy market works and seek to find more permanent solutions by May 2022.

Paola Tamma contributed to the coverage.

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