The snow storm Filomena has not only caused road blocks and endearing Christmas pictures. It has also unleashed a political battle after the price of electricity soared, touching all-time highs of two decades ago. The increase in demand due to the cold wave, the scarce contribution of renewable energies, and the high prices of natural gas, on which the Spanish market is highly dependent, have caused the average price of electricity to increase dramatically compared to to the lows set in 2020, which may lead to a sharp rise in the January bill. The Government alleges that it is a “one-off” increase due to “temporary” causes, although it has promised to open an investigation into possible “irregularities” in the electricity market. And the opposition in full criticizes the inaction of the PSOE and Podemos coalition Executive, demands urgent measures and denounces the double standards when facing the so-called energy poverty that they denounced when the increases in electricity occurred with governments of the PP.
The cold wave named Filomena has triggered the average daily price of the wholesale market for electricity, which is balanced by electricity companies through a computer auction. This Friday it stood at 94.99 euros per megawatt / hour (MWh), the second highest historical record after the 103.76 euros that marked on January 11, 2002. And although for this Saturday, -the prices are negotiated a day in advance in the wholesale market – it has relaxed to 80.66 euros / MWh because it is a weekend, these are abnormally high prices, since they are more than double than a week ago (41, 97 euros / MWh) and close to triple the annual average in 2020 (33.98 euros / MWh).
This increase is not fully transferred to the electricity bill paid by consumers, because the price of wholesale electricity only has a weight of 35%, the remaining 65% corresponding to taxes and so-called tolls, with which maintenance is paid. supply networks. Extrapolating the first eight days of January of this year and comparing them with last year, the electricity bill for an average consumer (with a contracted power of 4.4 kilowatts and a monthly consumption of 250 kilowatt hours), received the regulated tariff (Voluntary Price for Small Consumer) would increase by 28.4%. But it is not an exact calculation, much less because it depends on the evolution of the cold wave and the production of the different energy sources in the rest of the month, according to the simulator of the National Commission of Markets and Competition (CNMC ).
The Facua-Consumidores en Acción organization estimates, taking the same reference of the average kWh rate in these first eight days of January, that the average user’s electricity bill would be 83.24 euros, which represents an increase of 22, 2% on last year’s receipt. This consumer organization has demanded that the Government “not look the other way to the authentic savagery of rates that is taking place in the electricity market in the midst of the cold wave and undertake urgent regulatory measures to curb speculation.”
And the Government has not been slow to pick up the glove by announcing, through the mouth of the Minister of Consumption, Alberto Garzón, that he has asked the CNMC to investigate “if there have been irregularities in the electricity market”, and announcing that the Executive is “looking for solutions definitive for a regulated tariff that protects especially the most vulnerable families ”. A regulated rate that is the one that, among others, the consumers who benefit from the social bonus have, a discount on the electricity bill for households defined as vulnerable.
From the Ministry for the Ecological Transition, they have downplayed the increase in the price of electricity, ensuring that it is a “specific episode” due to various “conjunctural factors”, especially the increase in the price of gas, and they have recalled that these High prices are also occurring in other European markets. To “alleviate this situation”, the department headed by Teresa Ribera has announced the release of part of the strategic gas reserves, which are 80% of their capacity.
The former Ministry of Energy has stressed that, despite the increase in January, the electricity price in 2020 was 24% lower than in 2019, which translated into savings for a domestic consumer of 118.7 euros in their annual bill of electricity, but without mentioning that this reduction was also due to the collapse of international energy prices, particularly gas, due to confinements due to the coronavirus.
“In 2020 there was a collapse in the price of gas, which reached demolition prices. And now the cold wave is rising not only in Europe but also in China and Japan, with the aggravating circumstance that Spain is highly dependent on Algerian gas, which has cut deliveries in half ”, points out Francisco Villaverde, analyst of the electricity market.
Criticisms of the opposition
Nor have they been slow to remind the Government from the ranks of the opposition almost in full, the measures that both their co-religionists from Podemos and their socialist partners, with the President of the Government himself, Pedro Sánchez, at the head, demanded from the governments of the PP when there were strong increases in the bill, requesting an intervention to stop the “speculation” of the electricity market that they now deny.
“Those who were not going to leave anyone behind and boasted of a just energy transition began the year with a 20% rise in the price of electricity in the midst of a cold wave, affecting the most vulnerable families”, summarized the leader of the PP, Pablo Casado, in a message on Twitter. Along these lines, PP, Ciudadanos, Vox and even EH-Bildu and Compromís have demanded urgent measures from the Government to stop the increase in electricity bills such as a reduced VAT or to reduce the special taxes levied on the bill. They have also requested the urgent appearance in Congress of Ministers Garzón and Ribera.
Red Eléctrica, the electricity system operator that is majority owned by the State and chaired by the former socialist minister Beatriz Corredor, has also ruled out that there has been any irregularity in this price increase. “The price is set by a computer system that matches the offers at European level and which is influenced by the extraordinary situation of high demand due to the cold wave; the moderate production of renewables and international gas prices. Even though it is exceptional, it is not a historical maximum and it is far from the legal limit of the Iberian Market and from the historical maximums of the neighboring countries where there is no price limit ”, he pointed out on his Twitter account.