The price of electricity continues to rise in the heat of the cold wave. This Tuesday the cost of electricity again marked a new peak, and for Wednesday it is expected that those prices will be exceeded and 89.94 euros per megawatt hour will be reached, the second highest price of the month, only behind the one charged last Friday. And all this while the thermometers record downward records, reaching 20 degrees below zero in places like Teruel.
The increase in prices – which affects consumers who have contracted the Voluntary Price for the Small Consumer (PVPC) – is not the consequence of a direct decision of the Government nor of a large increase in the cost of generation, but the operation of the electricity market. But this increase threatens to create a new clash between PSOE and United We Can, given that the purple ones are pressing to accelerate the energy reform agreed with the socialists, who reject it and insist that these increases are punctual and whose plans go through a reform to longer term.
Roughly, there are three culprits that the price of electricity is growing these days. One of them, it is true, is the storm Filomena herself. But, fundamentally, the cause of the increase in prices is the increase in the cost of gas and, above all, a design of the electricity market that causes the final amount that the consumer has to pay is based on the price of the most expensive electricity to produce, which is precisely what is generated from gas.
This is how he explains it to 20 minutes Jorge Fabra, president of Economistas Frente a la Crisis and president of Red Eléctrica Española between 1988 and 1997, who considers that it is current “regulation” that causes these price hikes. In the current market, the prices of electricity for each hour are set one day in advance, and the operator covers the total demand by acquiring electricity from the electricity companies starting with the cheapest offer. The least expensive light is that produced through renewables, nuclear or hydroelectric plants, since these energies are cheaper than gas and, in addition, they do not have to pay emission rights for polluting gases simply because they do not emit them.
These cheap energies, however, do not usually cover all the demand in Spain for one day. And the missing part must be completed with electricity generated from gas, which is more expensive both for the price of the gas itself and for the emission rights for polluting products that electricity companies must pay. The problem with the market is that the price that sets this expensive light to produce is the one that end consumers have to pay on the bill, although the electricity generated from gas only represented 1% of the total mix.
The “benefits fallen from the sky”
This operation generates important benefits for electricity companies, since They can produce light through nuclear or hydroelectric plants at a low cost and sell it at a high price: the one that has cost them to generate electricity from natural gas. And the price of the total energy mix grows when the cost of gas rises, something that has happened now due to the greater demand caused by the cold, as well as by “deficiencies” in the international supply – according to Fabra – and by the increase in the demand for emission rights by an industry that is seeing some economic recovery.
Those are the so-called “benefits fallen from the sky”, that PSOE and United We Can pledged in their coalition pact to eliminate. Sources from the Ministry of Ecological Transition explain that the idea of the Socialists is to promote renewables until they achieve, along with other cheap energies, that electricity generated from gas is not needed to satisfy total demand and, therefore, that this do not mark the price of the total mix.
However, these sources admit that this will only be achieved in the long term, and the part of the United We Can Government insists that, in addition to promoting renewables, a new market regulation must be put in place as soon as possible that ends with those benefits fallen from the sky. That is why, taking advantage of the fact that the debate on the rise in the price of electricity has jumped to the media, the purple ones want to address the reform of a market that they consider dysfunctional and that operates in the same way every day of the year, even when do not receive media attention.
“The companies that operate nuclear and hydroelectric plants” have already recovered their initial investments thanks to this mechanism, so the money must be allocated “to directly reduce the cost of electricity supply”, consider purple fonts. “The high prices of electricity in our country represent considerable benefits for the small group of companies that make up the electricity oligopoly, but push millions of households into energy poverty, and lead to competitiveness problems for millions of Spanish companies”, they settle.