State aid: Commission approves Spanish and Portuguese measure to lower electricity prices amid energy crisis

The European Commission has approved, under EU State aid rules, a €8.4 billion Spanish and Portuguese measure aimed at reducing the wholesale electricity prices in the Iberian market (MIBEL) by
lowering the input costs of fossil fuel-fired power stations. The measure will apply until 31 May 2023. The support will take the form of a payment that operates as a direct grant to electricity
producers aimed at financing part of their fuel cost. The daily payment will be calculated based on the price difference between the market price of natural gas and a gas price cap set at an
average of €48.8/MWh during the duration of the measure. The Commission approved the measure under EU State aid rules, in particular Article 107(3)(b) of the Treaty on the Functioning of the
European Union, recognising that the Spanish and Portuguese economies are experiencing a serious disturbance. Furthermore, the measure is in line with the European Council
conclusions of March 2022, referring to emergency temporary measures reducing spot electricity market prices for companies and consumers that do not affect trading conditions to an extent
contrary to the common interest. Executive Vice-President Margrethe Vestager, in charge of competition policy, said: The temporary measure we approved today will allow
Spain and Portugal to lower electricity prices for consumers who have been hit hard by the rise in electricity prices due to Russia’s invasion of Ukraine. At the same time, the integrity of the
Single Market will be preserved. In addition, it allows Spain and Portugal some time to enact reforms that will increase the future resilience of their electricity system, in line with the Green
Deal objectives, and will ultimately mitigate even further the effects of the energy crisis on final consumers. A press release is available online.