Late Monday afternoon, the top executives of the electricity companies received a call from the third vice president, Teresa Ribera.
The also minister for the Ecological Transition transmitted to them that the next day the Council of Ministers was going to approve, by means of a royal decree-law, a shock plan with measures to face the rise in electricity.
It was something that was already in the most informed circles;
but it had to be confirmed.
However, he did not give them many details.
Only the statement of the measures, which the ministry's technicians have been preparing since August and which have been accelerated by the unstoppable increase in wholesale electricity prices.
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That same night, the President of the Government, Pedro Sánchez, in an interview on TVE, specified something else. Some measures are temporary, such as the reduction of the special tax, which is added to the reduction of the VAT and the generation tax; the reduction of the "extraordinary benefits" obtained by the remuneration of non-polluting energy at the price set for gas ("the companies will be able to bear it," said the president), which will reduce the charges that are charged in the receipt or the obligation of the dominant companies (that is, the big ones) to do auctions among the independents. Others of a permanent nature, such as the establishment of a vital minimum supply to guarantee that the most vulnerable households are not left without electricity or the control of the discharges of the swamps to avoid speculation.
The reasons for the plan were more than justified given the increase in gas prices, which are the ones that mark the marginal price at which all energy is sold in the wholesale market, and the CO₂ emission rights. Coincidentally, after taking the measures, the price of energy shot up to the record of 188.18 euros MWh last Thursday (the following days it fell to 146.57 this Sunday), figures that no study office had anticipated even with a lot (at most they had placed it around 60 euros).
The worst thing is that the futures market indicates that gas prices will continue to go through the roof at least until March 2022 and the Government cannot act on them.
The only thing you can do is entrust the gods of the international markets to turn on the tap and the authorities in Brussels to modify the pricing system and the CO₂ market, into which the funds of investment to speculate.
That is why there was no other option but to do it on the parts of the electricity bill in which you can maneuver: regulated costs and taxes, which have gone from representing 75% of the rate to less than 50%, while energy weighs more than half.
It doesn't rain to everyone's liking
But for many reasons that are put forward, it does not rain to everyone's liking. While the consumer and environmental associations applaud, the companies in the sector lament and prepare the artillery to go to court, also encouraged by the investment banks, which have produced a battery of reports in which the disqualifications of the plan are crowded: Legal insecurity, regulatory uncertainty, slowing down the recovery ... The electricity companies question the president's phrase that they can bear it. According to the sectoral employers, the reduction of the so-called "extraordinary benefits" of hydroelectric and nuclear generation (worth 2,600 million) "is an unfair and misguided measure, based on an alleged increase in profits." "It has," he adds,"An enormous impact on the stability of a sector that is neither responsible for this situation nor is it benefiting from it, something that can be seen by observing the stock market value of companies despite the rise in prices throughout 2021."
The companies also emphasize that it has not been taken into account that they have practically sold 100% of the base production (hydraulic, nuclear and renewable) for 2021 and more than 75% of 2022 at a price that does not exceed the 60 euros MWh, much lower than the
spot
market
(it is bought or sold with immediate delivery and at the current market price). In his opinion, there will be a reduction in income of about 65 euros MWh, in addition to the 10 euros MWh that they will lose due to the elimination of the remuneration they receive in the plants before 2005 that do not emit CO₂ ( the so-called
benefits fallen from the sky
which is in the phase of a bill in the Congress of Deputies). In this regard, the Nuclear Forum, in which the electricity companies are present, has threatened legal action and to close the nuclear plants before the agreed date if the project is not withdrawn, something they cannot do without having a favorable report from the operator of the market.
But the renewables firms have also complained, alarmed because the wording of article 4 of the royal decree-law does not make it clear if the reduction of the "extraordinary benefits" affects the facilities that they develop with closed contracts of sale (known as APP by its acronym in English). If so, they announced that they would have to close them down and stop making investments. "It is a slowdown to the energy transition," they even said in the sector. The mess was so huge that Vice President Ribera had to clarify that the measure will not apply to facilities that have not obtained extraordinary profits as a result of selling energy at the price of gas. The waters calmed, but not the spirits.
The companies, however, have some hope that the ministry will reconsider its position and revise the decree-law so that the blood does not reach the river. That is why, before going to court, they are pulling their powerful strings. They want to exhaust all the possibilities of approaching the Government through the avenues they find open, which are not only those of the Ecological Transition. On the other hand, it relieves them, as far as possible, that most of the measures are temporary.
