The most recent electricity bid process, which determines the variable component of power bills, angered Spanish consumers yesterday when they found out that January power bills will go up by 11%.
If that happens, the National Markets and Competition Commission (CNMC) could suppress the bid process and hold a new one in about 15 days. Wisely, Soria asked the regulator to intervene, and now the CNMV is tasked with finding out what happened and whether to go through with suppression. We should not forget that this concerns an intervention in a market with high demand.
Conversely, price fluctuations on the wholesale market in recent days was causing shutdowns at industrial power plants and protests from independent sellers, which are calling for the CNMC to act. But the results of yesterday's bid process have sounded all the alarms. It shows that the electricity market is not functioning efficiently. Further, a bid process this disproportionate could create high political, social and economic costs for Spain. In addition to any near-term action, Industry should isolate the underlying reasons that energy reforms are not keeping power bills low and paying down the tariff deficit. What happened in this bidding process raises yet another reason to reform the wholesale market. And this change should happen soon.
