Spanish government calls for probe into surging power prices
The Spanish government is asking energy watchdog CNE to investigate why power prices are shooting up in the wholesale market (the pool). On Tuesday, energy secretary Antonio Fernandez Segura sent a letter to CNE, saying that on 24th-25th May, prices went up more than 70% week-on-week.
The government claims that power demand is currently falling, but grid operator REE published data showing a 6% increase in demand during May (see separate story). IS
The rising prices are a worry to the ministry since they are feeding the tariff deficit (the gap between the cost of generating power and the regulated price). The tariff deficit was more than EUR 3.6 billion in 2005 and EUR 896.6 million in the first quarter of 2006, according to the regulator.
Power companies attribute the tariff deficit to the soaring costs of feed-stocks such as gas, saying that although revenues in the power sector grew almost 20% in the first quarter, the cost of generation jumped 44.52% to EUR 2.84 billion (see EDEM 10.049).
The government is not convinced and is formulating a package of reforms to address it. On 24th February, it introduced new legislation at the power pool to modify the workings of the market and is set to publish new regulations in the power sector in June.
Industry association Unesa called on Wednesday for a “drastic reduction” of customers in the tariff market as the only way to cut the deficit. At present, both households and small and medium-sized companies are allowed to buy power at regulated prices. Tariffs have to reflect growing costs, Unesa argued in a statement. IS
Other Related Stories
