Spain mulls price cap for gas plants to bring down power bills

MADRID (Reuters) -Spain is considering introducing a maximum price at which combined-cycle gas plants can sell power to the wholesale market as part of an effort to rein in sky-high consumer electricity bills, Energy Minister Teresa Ribera said on Tuesday.

As global energy prices soar, exacerbated by Russia’s invasion of Ukraine, European governments are racing to find solutions ahead of a European Union summit later this week.

“The simplest thing to do is to introduce a maximum price at which combined cycle plants can offer (to the market) then have some ex-post adjustment,” Ribera told reporters after a weekly Cabinet meeting, adding that it would be a temporary measure.

Soaring gas prices are the main driver of rising electricity costs, and Spain has long advocated for a redesign of power markets that would decouple gas prices from electricity prices but has not provided details on how that would work.

On Monday, Belgian Prime Minister Alexander de Croo said his country would take the lead in pushing for a Europe-wide cap on gas prices.

Spain had appeared last week to be behind a push to cap wholesale electricity prices, an option favoured by Portugal, but an Energy Ministry source on Monday said that was no longer the main option on the table.

Ribera said she had not discussed the possibility of new taxes on utilities at a meeting with electricity industry chiefs even though Labour Minister Yolanda Diaz had suggested the government was planning a new special tax on large utilities.

“We didn’t speak about taxes with the big electricity companies, but rather about how to get cheaper energy and how they can contribute to citizens’ comfort,” Ribera told reporters.

One of the EU’s key ambitions in the drive for energy security is boosting the proportion of renewable energy generation in its mix.

Spain said on Tuesday it now aimed for 70% of its generation capacity to be renewable by 2026, having previously set a 2030 target for that milestone.

(Reporting by Belén Carreño, Emma Pinedo and Isla Binnie; Writing by Nathan Allen; Editing by Inti Landauro, Paul Simao and Jonathan Oatis)