Spain and Portugal on Tuesday sealed their long-delayed single power market, billed as Europe's largest spot market, and Portugal hailed it as a route to lower electricity prices.
Portuguese Prime Minister Jose Manuel Durao Barroso, who was joined at a signing ceremony by Spanish counterpart Jose Maria Aznar, said the pact had created a single power market of 53 million people.
"There are various studies, and all the elements we have available point to a very significant drop in electricity prices," Durao Barroso told a news conference.
Portuguese Economy Minister Carlos Tavares and his Spanish counterpart Rodrigo Rato signed the accord creating the Iberian Electricity Market, or Mibel.
Mibel is due to start on April 20. Generators from each country will compete for distribution and marketing customers in Spain and Portugal, which together have up to 30 million customers.
That would make the Mibel the largest spot market in Europe and the second cross-border market after the Nord Pool, which was formed in 1993 among Sweden, Finland, Norway and Denmark.
Portugal hopes Mibel will drive down power costs in Portugal by letting customers choose suppliers. The centre-right government estimates costs for businesses are about 10 percent higher than in Spain, and household costs are 14 to 24 percent higher.