April to mark lights out for Spanish electricity auctions

The auctions that set the price of electricity for residential consumers will disappear in April, giving way to “a simpler” system, Alberto Nadal, state secretary for energy, has announced.

Speaking in an interview with EL PAÍS, which was published in Spanish on Sunday, Nadal said that the variable part of the utility bill — representing 45 percent of the total price that has to be paid by consumers, with the rest being a fixed rate — will be set in accordance with the average price on the wholesale market.

This will “allow significant savings for residential consumers,” Nadal explained. “Under the previous system, the price of energy — which fluctuates every hour — was established by an auction system that set a constant price for three months,” he added.

“It was very complex, with lots of intermediaries, and it generated significant surcharges for consumers,” he said.

The decision follows an outcry in December, when the auction in the wholesale market looked set to force consumer rates up by at least 11 percent for January 2014. In response, the government set in motion a full investigation to determine whether power companies were colluding to raise the price of electricity. No evidence of wrongdoing was found, but later that month, Madrid decreed that the price hike in January could not exceed 2.3 percent.

The cost of electricity rose an average 4.5 percent in 2013, and has gone up by nearly 80 percent in the past decade. Spain’s electricity bills are currently among the highest in Europe, with only the citizens of Ireland and Cyprus having to pay out more.