OVIEDO, Spain

Spain and Portugal will extend the price cap on natural gas until the end of the year, Spain’s energy minister said on Tuesday.

Speaking to reporters ahead of an EU energy meeting in Brussels, Teresa Ribera said the European Commission has explicitly backed the plan.

“No open questions remain, so all that’s left is formally adopting it,” said Ribera, adding that Spain’s government will pass the extension later Tuesday.

The hotly debated Iberian mechanism to lower energy prices came into effect in June, after the war in Ukraine sent natural gas prices soaring.

A study by the Esade Center for Economic Policy found that it saved each household paying regulated energy bills in Spain an average of €209 ($225) last year. According to the study, it helped Spanish consumers save nearly €2.1 billion and lowered inflation by 0.3% in 2022.

The Spanish government says the Iberian mechanism had saved a total of €5.1 billion by the end of February. It was set to expire on May 31.

While Spain and Portugal consider the extension to be good news, Ribera had previously said Spain hoped to extend the price cap until the end of 2024.

Last spring, the countries managed to convince other EU nations to allow them to enact a price cap on natural gas after long debates.

Under the previous system, expensive gas was driving up the price paid on all energy, including cheaper renewable sources.

Spain and Portugal are also relatively isolated from the European power grid.

Last week, Spain’s grid operator said renewables could make up half of Spain’s power generation this year, up from 42% in 2022.