Portugal and Spain want to prolong the temporary price cap on natural gas and coal used in power plants within the Iberian peninsula, reports Reuters.

According to the news agency, the two nations intend to formally request the EU Commission’s permission to extend the national intervention allowance authorized by the union’s regulator last year.

The Iberian peninsula, Reuters writes, has weak interconnections with the rest of Europe – a situation that has resulted in regional electricity prices becoming inflated when fossil fuel prices rise despite an abundance of renewable power in both Spain and Portugal.

With the maximum set to EUR 40 per MWh, the cap has provided a 20% price reduction for Portuguese rate payers, equating to total savings of EUR 489m, the news agency cites Portuguese Minister of Environment & Climate Action Duarte Cordeiro saying.

As a part of general discussions on European gas prices, a so-called Iberian model has also been entertained, with Madrid having been among the staunchest policy advocates for a setting a low price cap on natural gas.