Power trading platforms are urging the Spanish government not to intervene unilaterally in the system that sets the price of electricity, in its bid to bring down sky-high utility bills, according to a letter seen by Reuters.
European countries are scrambling to agree on ways to manage surging gas and power prices, pushed higher by Russia’s invasion of Ukraine, which are eating away at people’s spending power across the bloc.
Spain and Portugal received permission in March to take their own temporary measures to contain prices. The neighbours have been working on ways to limit the impact of expensive gas, which often sets the overall price in the electricity system.
Spanish Energy and Environment Minister Teresa Ribera has said the simplest option is to cap the price at which gas plants can sell their power to the market. Portugal’s Environment Minister Jose Duarte said last week the details were still being negotiated.
Spain’s competition regulator CNMC regained the power to regulate, fix, and control the prices and rates of the energy market in Spain in January 2021, following years of conflict with other branches of government.
In response to these discussions, Spanish derivatives exchange MEFF and clearing house BME Clearing, along with Portuguese counterparts OMIP and OMIClear wrote to Spain’s Secretary of State for Energy to express their worries.
“In our opinion, a possible regulatory intervention that affects the price-setting mechanism for the underlying asset, as an administrative measure unconnected to the effective market conditions, and that deviates from the price-setting model that is common in all of Europe, would generate a high risk of regulatory uncertainty,” they said in the letter dated April 22.
Any changes must be made “in harmony with the rest of the EU”, the letter said. This is not the first time Spanish authorities have been tempted with price controls. In 2019 The Gas Industrial Association, along with nine other industry groups from various sectors, asked Spain’s National Commission for Markets and Competition (CNMC) to set caps on toll prices for natural gas, citing negative impacts to the country’s competitiveness.
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