Competition Commission will investigate sharp rise in electricity price

Barcelona / MadridThe Spanish government has asked the National Commission of Markets and Competition (CNMC) to investigate the sharp rise in the price of electricity at the beginning of the year, which broke a historic record on Friday. This has been confirmed via Twitter by the Minister of Consumer Affairs, Alberto Garzón. Previously, sources from the Ministry for Ecological Transition had already hinted at this investigation, to assess "whether there have been any irregularities", and pointed to the feeling that nuclear and hydroelectric power are being offered at a very expensive price on the market.

Garzón pointed out that the Spanish government is "looking for definitive solutions for a regulated tariff that will especially protect the most vulnerable families". However, the minister has not been able to avoid political controversy. The price increase has provoked indignation in the opposition, which has turned against the second vice-president of the Spanish government, Pablo Iglesias, who has seen leaders of other parties remind him of a tweet from 2017 in which he accused the government of being "complicit" if it consented to the "greed" of electricity companies.

Cuca Gamarra, spokesperson for the PP in Congress, has pointed out "the political scam of the social shield" and announced through Twitter that her party will request the appearance in the lower house of Alberto Garzón and the vice-president of Ecological Transition, Teresa Ribera. Bildu has also requested the appearance of the two ministers.

For their part, Ciudadanos has registered a battery of questions on what measures the Spanish government intends to implement to alleviate the effects of these increases on families. The spokesman for Compromís, Joan Baldoví, also stressed that the government "has the capacity to regulate" this price increase.

Similar controversies had already taken place before. At the end of 2013, with the PP government and José Manuel Soria as minister, there was a sharp rise in the price of electricity. The consequence was the reform of the electricity market, and also a Competition Commission investigation, which concluded that Iberdrola had reduced the supply of some of its hydroelectric plants in order to raise prices. The CNMC fined the electricity company headed by Ignacio Sánchez Galán 25 million euros and the company filed an appeal which is pending in court.

The peninsular electricity market is marginal. In other words, the price is set by the latest technology entering the supply, which is normally the most expensive: first comes nuclear, because plants cannot be stopped, and then other technologies such as renewables come in, ending with the most expensive ones: gas plants.

However, in recent days there has been an increase in price, partly due to the increase in demand caused by the cold spell linked to the Filomena storm, but also due to an increase in the price of nuclear and hydroelectric power and an increase in the price of gas used in combined cycle plants.

A short truce for Saturday

The market sets the price hour by hour, one day in advance. And this Saturday there will be a small decrease in the price escalation, as the wholesale price of electricity will be 15% lower than on Friday, even though it will remain expensive, above 80 euros per megawatt hour (MWh). Specifically, the pool (the wholesale market) has set for this Saturday an average daily price of 80.66 euros per MWh, far from the 94.99 euros per MWh of today, Friday, according to data from the Iberian market operator (Omie). Despite the drop in the average price, Saturday's peak will have a price of 121.24 euros per MWh, higher than this Friday's maximum of 114.89 euros.

This Friday the average price has reached a historic high by tripling the average for the whole of 2020, which was around 33 euros per MWh.