Spain’s large power users say rising prices mean regulated tariffs must stay
Large electricity consumers in Spain want to keep regulated power tariffs for their sector because they fear that lack of competition among suppliers will result in rising prices.
The Association of Large Energy Consumers (known by its Spanish acronym as AEGE) has urged the government to retain the tariffs until 2010 instead of abolishing them as planned in 2007. Residential tariffs are also due to go in 2010 under measures for the transition to a fully liberalised market.
Prices could rise by 40% if the cap is removed by dropping regulated tariffs, says AEGE. At the moment large users can switch back to regulated rates after one year. Companies hope the current Socialist government will prove more receptive to their arguments, which were rejected by the previous conservative administration.
Low tariffs are one reason why companies want to keep regulation. “Tariffs for large users are pretty low and recent rises in oil and coal costs make them worried that open market prices will rise,” said an analyst. “Prices in the liberalised market have risen to near the regulated tariff after starting a few years ago with a discount of 15% or more.”
Two companies, Endesa and Iberdrola continue to share 80% of the markets for generation, distribution and supply. Their continued dominance makes large customers believe that they will be able
to push up prices, the analyst said.
“In contrast to the gas market, there has not been very much price competition in the power sector. The duopoly of Endesa and Iberdrola has proved much more resilient than the former monopoly Gas Natural,” the analyst said.
Prices in the regulated market averaged euro cents 7.82/kWh in the year to July, compared to euro cents 1.85/kWh in the liberalised sector, according the energy regulator, the Comisión Nacional de Energía.
The regulated tariff for large users, high tension of more than 72.5 kV, was euro cents 2.76/kWh, compared to less than one cent in the free market, the regulator said in its monthly report on the power market in September. Consumption in the regulated market was 77.65 GWh during the period, and 35.32 GWh in the free market. DM
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