Spain, Portugal get ‘special treatment’ from EU leaders to keep power prices down

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Spain and Portugal won the right Friday to take temporary, unilateral measures that may buck EU electricity market rules in an effort to ease pressure on power prices.

The decision came at the end of a drawn-out EU leaders’ summit, where the subject of energy — how the EU buys it and how much it pays for it — kept leaders talking late into Friday.

”The Iberian peninsula has a very special situation … with a high load of renewables and with very few interconnections,” European Commission President Ursula von der Leyen said at her concluding press conference, stressing that these particularities drive exceptionally high electricity prices in the region.

According to the final conclusions approved by EU leaders at the summit, the Commission will “urgently assess the compatibility of emergency temporary measures in the electricity market notified by Member States.” Brussels will make sure that EU governments don’t take unfair advantage of any measures adopted.

The leaders also agreed, for the first time, to jointly purchase gas — an attempt to use their collective market power to drive down prices.

The EU’s current electricity system pegs the price of power to the most expensive fuel needed to meet demand. Lately, that’s been gas, and that’s led to consistently high power prices. The situation got even worse because of Europe’s moves to wind down gas imports from Russia, a key supplier of energy to the Continent.

Some leaders, especially those from Southern Europe, were pushing at the summit for more permanent changes to the market structure — such as “unbundling” gas from the market or putting a cap on electricity or gas prices. But those attempts faced unyielding opposition from countries like Germany and the Netherlands, which are strongly against market interventions.

Since finding a permanent solution for the whole bloc proved impossible, Madrid and Lisbon pushed for temporary permission to introduce some measures on their own. At a joint press conference, Portuguese Prime Minister António Costa and Spanish Prime Minister Pedro Sánchez said they were “satisfied” with the result 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 functions, angling to find more permanent solutions by May 2022.

Paola Tamma contributed reporting.