Saturday, September 25

The light blinds and overshadows the government

The prices of electricity continue their unstoppable escalation without neither the invisible hand of the market holding them a bit nor the Government just hitting the key to do so. The price of a megawatt hour these days easily exceeds 150 euros in the wholesale market. It multiplies by approximately three the prices of a year ago and approximately by two those of just four months ago. It is difficult to understand that a product or a basic service and universal consumption shoots up 100% in a four-month period and 200% in a year without the government that has to face the problem soon find a mechanism to tackle it.

The problem is not only ours, it is true. Many of our European partners are also suffering from it. The problem is not only ours, but the problem is especially ours. Our electricity market model is singularly convoluted and responds in large part to decisions made in the remote and recent past that have proven to be wrong. Very relevant events that have occurred since then, such as the evidence of climate change and the greenhouse effect and, let’s say, global awareness that we have to look for cleaner energy sources, have highlighted the imperfections of our model. Changing it entirely overnight is impossible.

Prices spiked suddenly in January, blamed on the stormy Filomena. They fell in February, in March they returned to an upward trend, in May they reached the levels of January, above 80 euros per megawatt hour, and since then they have accelerated upward, especially in the last three weeks. Until August, the government was slow to react and take measures and short on explanations. We were even told that there was little to do, that there was not much room for maneuver, especially when it came to setting prices. The government was blinded, dazzled. Now it seems that the Executive accelerates, that it is finding ways of maneuver both in prices and in bills. A little over a week ago, the president himself, Pedro Sánchez, made a commitment that the price at the end of the year would be equivalent to that of 2018, discounting the effect of inflation. This Tuesday new measures go to the Council of Ministers. One wonders if the measures – both those to lower some of the taxes on electricity and those aimed at alleviating the impact on lower-income families (social and thermal bonus, social shield, minimum vital consumption) – could not have been taken before. If they had all been announced, explained and carried out three months ago, perhaps today we would not be talking about those 153.43 euros per megawatt hour that are expected for this Tuesday.

The light has become a political problem of the first magnitude for the Government. First it blinded him, it dazzled him, and now it overshadows him: it has eaten up a good part of the reputational recovery expectations that were generated with the July remodeling, with the changes in ministerial portfolios. But the light has become, above all, a serious economic problem that has arisen for millions of consumers. For many middle and lower class families and for many SMEs, especially those in sectors highly dependent on this energy. Not only the stability of the Government but also and above all the economic tranquility of millions of citizens will depend on the success and effectiveness of all the measures at the end of the year.

About this blog

Arsenio Escolar is a journalist and writer. With his ‘Chronicles of Power’ –information, analysis and first-hand opinion–, he will enter weekly in in the details of political, economic, social power … and of its protagonists.

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