Monday, August 15

Hydropower sets the price of electricity again at the most expensive hours of the most expensive day in history

History repeats itself and the hydroelectric plant will be the source that sets the price of electricity in the most expensive hours of this Thursday, when the wholesale electricity market will pulverize another all-time high, the sixth so far in August. to stand at an average of 122.76 euros per megawatt hour (MWh), compared to 117.29 euros / MWh of the previous record reached on the 13th.

The Government will study the extra cut to the electricity companies that Podemos requests: “We are going to evaluate all the proposals”

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According to data from the Iberian Electricity Market Operator (OMIE), the highest hourly price this Thursday will be reached between 10 pm and 11 pm, standing at 129.81 euros / MWh. At that time, it will not be natural gas, but hydroelectric, which sets the price of electricity. The same will happen at 23 at night, the second most expensive hour of this record day, when it will stand at 127.78 euros.

These units, with very low variable costs, use a public good such as water in facilities in some cases centuries old that are taking advantage of the current market situation (gas and CO2 through the roof and little wind) to present offers even higher than those of the combined cycle plants (which burn natural gas, the price of which has skyrocketed, and which also bear the high cost of emission rights), thus setting the price charged by all generation technologies for the marginalist design of the wholesale market.

This practice is no exception. A recent analysis by showed that the hydroelectric plant has set the pool price in 75 of the 100 most expensive hours this year with record prices. It already happened with the previous record, when the pumping hydraulic generation set the price at the most expensive hour, 10 at night, when it reached 128.54 euros / MWh. At the beginning of that week, the so-called pool began a streak of five consecutive daily records in the heat of the heat wave. That Monday, the water set the price at 22 out of 24 hours a day. This Thursday, on the other hand, the combined cycles will mark a price in 15 of the 24 hours a day. But it will be the hydroelectric plant that commands the most expensive moments of the day.

The average prices this Thursday for Spain and Portugal (which share the electricity market) are higher than those of the wholesale markets of France (93.2 euros / MWh), Germany (92.6 euros / MWh) or Greece (118.74 euros / MWh), but lower than those of Italy (129.63 euros / MWh). Compared to a year ago, the pool will be 165% more expensive than the levels it marked for the same dates in August 2020, when it was 46.25 euros / MWh. That month, with demand still sunk by the pandemic, the average wholesale market price was 36 euros. The pool determines the cost of energy, which accounts for approximately one third of the bill of a domestic consumer covered by the regulated rate of the voluntary price to small consumers (PVPC).

Inflated prices

The new record for this Thursday was known shortly after on Wednesday the National Markets and Competition Commission (CNMC) announced that it had detected that some electricity marketers, which the body did not identify, have taken advantage of the entry into force of the new rates on June 1 to raise their rates by applying penalties of up to 30% in the price of energy.

Competition has analyzed the prices applied by a total of 43 trading companies in the free market, in which the parties agree on contract prices. These, according to all experts, are higher than those of the PVPC, in which the cost of energy is directly indexed to pool prices, although the price of the pool also ends up having an impact on what supplies pay on the free market. The CNMC assures that the vast majority of trading companies have adequately transferred the variation in the new tolls, but it has detected cases in which it has not been done and is “monitoring” the regularizations of these contracts. At the moment, there are no open disciplinary proceedings.

For the consumer association Facua, the lack of transparency of the CNMC, which hides the names of the electricity companies that have incurred this illegality, is “intolerable, a fact that makes it difficult for those affected to claim the amounts overcharged. your receipts and therefore the return of the money. ” This association has approached the body to clarify which electricity companies “have illegally inflated the price of energy to users, taking advantage of the adaptation of bills to the new time zones.”

For its part, the OCU requires the CNMC to “firstly, make public the name of the companies that have committed the irregularities included in this report and, secondly, to sanction these practices contrary to the protection regulations in an exemplary manner. of consumers “. It also calls on the Ministry of Consumption “to modify the regulations to introduce more transparency and guarantees in the performance of free market trading companies.”

Political fight

The spiral of increases in the bill, the political anger generated, the tensions within the coalition Executive and the excessive remuneration that, according to many observers in the sector, the daily auction of the wholesale market grants to the hydroelectric plant, have led the Government to open the door for the first time for a public company to manage expired hydroelectric concessions. In addition, this week Unidos Podemos has transferred to the Ministry for the Ecological Transition a proposal to lower the electricity bill that would limit the price of nuclear and hydroelectric energy by decree law.

Podemos’s proposal involves establishing a fixed price for nuclear energy, “as France already does”, so that traders can acquire energy from atomic plants at that reference price, and a “maximum” for the This proposal is in addition to the bill proposed by the Government to drain the excess remuneration of hydroelectric and nuclear due to the increase in the cost of the CO2 market. This is, together with the future fund to remove from the receipt the cost of premiums to renewable, the great commitment of the Ecological Transition to lower the price of the bill, although it will take months to come into force and the escalation does not seem to have an end.

The nuclear companies themselves have asked for a “reasonable” remuneration for their production through a fixed price that the president of the Nuclear Forum, Ignacio Araluce, estimated a few months ago at about 57 euros per megawatt hour. This price, lower than the almost 68 euros already registered on average by the pool in this extraordinarily expensive year, is very similar to the calculations of nuclear generation costs provided by Endesa to the International International Energy Agency (IEA) in a recent visit of its technicians to Spain. However, it is much higher than the 42 euros of a similar mechanism in France.

The spokeswoman for the Executive, Isabel Rodríguez, indicated on Tuesday that the United We Can proposal will be studied, although the Ministry for the Ecological Transition doubts that it is compatible with European regulations. For its part, the UGT on Wednesday described this escalation of records “unsustainable and fraudulent”, and demanded urgent measures from the Government, which it claims to prioritize the fight against energy poverty.

The third vice president, Teresa Ribera, is expected to appear in Congress next Monday to explain the measures of her department to stop the spectacular rise in electricity, which has already eaten up the VAT reduction on the receipt and the temporary suspension of the tax. to the generation approved by the emergency government in June.

Ribera’s appearance was agreed on Wednesday by the congressional table. This body has refused to admit to processing a petition presented by Esquerra Republicana and EH-Bildu for the president of Iberdrola, Ignacio Sánchez Galán, to go to the Chamber to report the emptying of reservoirs operated by this energy company, the national hydroelectric leader, with the In order to maximize its electricity generation, a practice that Transición Ecológica is investigating and that Ribera herself described a few days ago as “scandalous”.