The European Union has agreed to extend a price cap set on natural gas used for power generation in Spain and Portugal until December 31, Spanish Energy Minister Teresa Ribera said on Tuesday.

“This tool allows to keep protecting consumers until the end of the year,” Ribera told reporters on Tuesday morning in Brussels.

“The agreement enables the extension of this temporary mechanism that will cap the gas price at an average of 55 euros ($59.48) per megawatt-hour to 65 euros per megawatt-hour at the end of this extension,” an Energy Ministry’s spokesperson said.

The so-called Iberian mechanism, in place in Spain and Portugal after the two countries reached a deal with the European Commission in the spring of 2022, is a joint scheme through which fossil fuel plants’ power costs are subsidised in a bid to bring down soaring electricity prices.

The governments pay the difference between the cap and the market price, which jumped following the Russian invasion of Ukraine.

The system was set to expire on May 31.

Back in January, Ribera had said her government wanted to extend the price cap until the end of 2024 and set the cap at 45 or 50 euros per megawatt-hour.
Source: Reuters (Reporting by Inti Landauro and Belen Carreño Editing by Aislinn Laing, Jason Neely, Peter Graff)