Spain's Electricity Suppliers Hit Back

 

The government's decision to annul the result of last Thursday's electricity wholesale auction, which would have meant an 11- to 13% rise in consumers' bills as of January, has been taken as a declaration of war by the sector, which is considering legal action against the administration.

The government based its decision on a report by Spain's CNMC anti-trust authority that identified "atypical circumstances" in the run-up to Thursday's auction – essentially accusing the power companies of manipulating the market to hike the price of electricity.

For now, the sector will await the government's next move. It is expected that, provisionally, September's hike of 3.1% will be repeated, if the price of the 55% regulated component does not rise. The increase could still be adjusted according to market conditions.

PM Mariano Rajoy said Friday that the government was seeking a "procedure to fix an alternative price" to that of the auction, and that this should be completed by the end of the year. In the meantime, the prime minister said, the "unjustified" hike would not be passed on to consumers.

The electricity companies have called on the CNMC to publish in full the details of the auction, the figures involved and the participants. "Serious damage is being done to the reputation and economies of companies that perform a vital service for this country and employ 180,000 people," a statement issued Saturday by UNESA, the association that groups together Spain's electricity companies, read.

Also Saturday, Industry Minister José Manuel Soria further enraged the sector by criticizing the "crude manipulation in order to modify prices," while also stating that the companies "don't know how to prove that [the auction] was transparent."

Unesa responded to the "very serious" accusation and accused the minister of "contempt for the honorability of the managers and employees" of the electricity sector.

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