What is Royal Decree-Law 10/2022?
On 15 June 2022, the emergency measure approved by the government to reduce the price of electricity came into force. This is Royal Decree Law 10/2022 which establishes, on a temporary basis, a production cost adjustment mechanism to reduce the price of electricity on the wholesale market.
The measure has articulated a regulatory instrument that aims to reduce the marginal price of electricity in the wholesale markets of the Iberian peninsula and, ultimately, to promote a reduction in the retail prices borne by all electricity end-consumers. The measure was foreseen to apply for a period of 12 months and until 31 May 2023 at the latest.
As mentioned above, the gas cap adjustment mechanism was due to end on 31 May 2023, however the Spanish government has decided to extend this deadline to 31/12/2023.
The Minister for Ecological Transition and the Demographic Challenge, Teresa Ribera, stated that this measure “protects Spanish consumers until the end of the year”. This is because if natural gas remains at current prices, the adjustment mechanism will probably not be triggered, but if it were to rise again, it would keeping the price of electricity at a reasonable price and not so dependent on the evolution of the price of natural gas.
To sum up…
The expiry of the mechanism has been extended as a precautionary measure and will now run until 31 December 2023. This means that, if energy prices remain low, it may not need to be activated and consequently will not be reflected in the bill. On the other hand, if energy prices rise, it will be reactivated, reducing the price of energy for final consumers.
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