Electricity price rise fixed at 2.3 percent for first quarter

Following an avowal that consumers would not bear the cost of a potential 11- to 13-percent hike in electricity costs resulting from a wholesale auction carried out last week, the government announced Friday that the rise for the first quarter of 2014 would be fixed at 2.3 percent. That was the lowest proposal offered by the CNMC anti-trust authority and is split between a 1.4-percent rise on the liberalized part of consumers’ bills, and 0.9 percent on the regulated component. The increase will affect 18.5 million consumers whose rates are based on the government’s TUR (Rate of Last Resort) system, the most common billing type in Spain.

With the latest rise taken into account, electricity rates have risen by 10 percent over the past nine months, following increases of 3.1 percent in October, 3.2 percent in August and 1.2 percent in July. Since 2006, electricity prices have risen by 70 percent. However, the government pointed to the 11-percent increase facing consumers had the Industry Ministry not annulled the results of the December 19 auction after the CNMC observed “atypical circumstances” in the bidding process.

Prime Minister Mariano Rajoy said Friday that reform of the electricity sector is “the most complicated” matter he has faced in this legislature given that he inherited a tariff deficit — the difference between what it costs suppliers to produce energy and what they can charge consumers — from the previous Socialist government of 26 billion euros.