# Electricity exchanges urge Spain, Portugal not to act alone on power prices
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-04-25
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Spanish Power Trading Platforms Urge Government not to
Meta Description: Discover the concerns of power trading platforms in Spain urging the government not to interfere in the electricity price-setting system to alleviate high
URL: https://financedigest.com/electricity-exchanges-urge-spain-portugal-not-to-act-alone-on-power-priceshtml

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By Isla Binnie

MADRID (Reuters) – Power trading platforms are urging the Spanish government not to intervene alone in the system that sets the price of electricity, in its bid to bring down sky-high utility bills, according to a letter seen by Reuters.

European countries are scrambling to agree on ways to manage surging gas and power prices, pushed higher by Russia’s invasion of Ukraine, which are eating away at people’s spending power across the bloc.

[Spain and Portugal](https://www.financedigest.com/firefighters-scramble-to-put-out-flames-in-heatwave-hit-portugal-spain.html "Firefighters scramble to put out flames in heatwave-hit Portugal, Spain") received permission in March to take their own temporary measures to contain prices. The neighbours have been working on ways to limit the impact of expensive gas, which often [sets the overall price](https://www.financedigest.com/unicredit-sets-out-8-billion-aid-package-for-italy-clients-hit-by-surging-prices.html "UniCredit sets out  billion aid package for Italy clients hit by surging prices") in the electricity system.

Spanish Energy and Environment Minister Teresa Ribera has said the simplest option is to cap the [price at which gas plants can sell](https://www.financedigest.com/3-tricks-to-get-a-better-price-when-selling-your-car.html "3 Tricks To Get a Better Price When Selling Your Car") their power to the market. Portugal’s Environment Minister Jose Duarte said last week the details were still being negotiated.

In response to these discussions, Spanish derivatives exchange MEFF and clearing house BME Clearing, along with Portuguese counterparts OMIP and OMIClear wrote to Spain’s Secretary of State for [Energy to express their worries](https://www.financedigest.com/european-shares-rise-on-easing-energy-supply-worries-draghi-speech-in-focus.html "European shares rise on easing energy supply worries; Draghi speech in focus").

In our opinion, a possible regulatory intervention that affects the price-setting mechanism for the underlying asset, as an administrative measure unconnected to the effective market conditions, and that deviates from the price-setting model that is common in all of Europe, would generate a high [risk of regulatory](https://www.financedigest.com/is-regtechs-rise-one-way-tackle-the-international-regulatory-game-of-risk.html "Is Regtech’s rise one way tackle the international regulatory game of Risk?") uncertainty,” they said in the letter dated April 22.

Any [changes must](https://www.financedigest.com/credit-chameleons-lenders-must-tune-in-to-changing-customer-attitudes.html "Credit Chameleons – Lenders must tune in to changing customer attitudes") be made “in harmony with the rest of the EU”, the letter said.

Spanish [electricity providers association](https://www.financedigest.com/funds-from-electricity-levy-could-help-german-households-says-renewables-association.html "Funds from electricity levy could help German households, says renewables association") AELEC – formed of power firms EDP, Endesa, Iberdrola and Viesgo – also voiced concerns about the possible unintended consequences of any mechanism to create a reference price for the gas used to generate electricity, in a letter to European officials dated April 8 and seen by Reuters.

AELEC said such a mechanism would cost more than it would [save and suggested it would even encourage](https://www.financedigest.com/why-now-is-the-time-to-implement-a-time-saving-business-model-encouraging-team-members-to-discuss-their-challenges.html "Why now is the time to implement a time saving business model, encouraging team members to discuss their challenges") the use of gas.

The group said its members had not been consulted and based its comments on leaked documents as there had been no official communication from Spanish or Portuguese authorities at that time.

Ribera and Duarte will meet EU antitrust chief Margrethe Vestager in Brussels on Tuesday, Ribera’s ministry said without indicating what would be discussed.

(Reporting by Isla Binnie; Editing by Marguerita Choy)


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