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Spain Annuls Electricity Rate Hike Auction

Source: Reuters - Fri 20th Dec 2013
Spain Annuls Electricity Rate Hike Auction

Spain's competition regulator CNMC said on Friday it was annulling the results of a quarterly auction which would have lead to a 10.5% hike in domestic power bills, sparking a wave of protests.

The quarterly auction of wholesale electricity prices, conducted on Thursday, determines around 35% of domestic electricity bills.

The regulator said it would not validate the auction due a "concurrence of unusual circumstances" in which it was executed and in the context of high daily market prices in previous weeks.

Industry Minister Jose Manuel Soria, who pledged earlier this year to protect consumers from abrupt price increase, said on Thursday the CNMC would look in to whether there had been any manipulation in the auction and warned it could be cancelled.

The auction had added to doubts on whether a wide-ranging energy reform passed in July would be enough to fix a distorted power market.

The reforms, which include subsidy cuts and tax hikes, were meant to spread the burden of curbing a 30 billion euro ($41 billion) electricity tariff deficit among consumers, companies and the state. The 3.6 billion euros deficit this year will be held on the balance sheets of utilities such as Endesa, Iberdrola and Gas Natural. The spike on Thursday follows a 60 percent rise in the daily electricity market, or pool, in December, just after the government's Nov. 29 decision to withdraw sector funds. Wholesale prices have topped 90 euros per megawatt in December versus an average of 45 euros during the rest of the year, prompting the government to request a regulatory probe into the daily pool prices €30 bln electricity tariff deficit among consumers, companies and the state.

The €3.6 bln deficit this year will be held on the balance sheets of utilities such as Endesa, Iberdrola and Gas Natural.

The spike on Thursday follows a 60% rise in the daily electricity market, or pool, in December, just after the government's Nov. 29 decision to withdraw sector funds.

Wholesale prices have topped €90 per megawatt in December versus an average of €45 during the rest of the year, prompting the government to request a regulatory probe into the daily pool prices.

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