Friday, September 17

The price of electricity reaches prohibitive levels for the Government

The first question in the press conference after the Council of Ministers on Tuesday was about the price of electricity. The spokeswoman, Isabel Rodríguez, said that it is “an issue on which there is absolute sensitivity” in the Government. There was a second question minutes later and the minister must not have liked it very much, because she started by saying “to close the chapter …”. Don’t even think about asking about the light. It was clear that he did not really want to talk about it. A third journalist brought up the subject again and almost apologized: “Excuse me for insisting on the price of electricity.” This happens with the controversies that haunt the Government without it being able to do much in the short term. In these cases, what is done is to shorten the press conference, which is what happened.

United We Can was much more talkative than Rodríguez to the point that it proposed a certainly novel alternative: demonstrations promoted from within the Government to pressure the Government. It is not a case of split personality, but it is quite close. Txema Guijarro, one of the leaders of the parliamentary group, recommended that citizens take to the streets with a double mission, denounce this situation and counteract the pressure of the electricity companies. That is to say, in a sentence he accused the Government of which United We can form part of two somewhat shameful things: of passivity in the face of runaway price growth and of not standing up to the big corporations: “If we want a bold, courageous government, If it makes decisions that place it in front of the oligopoly, citizens have to mobilize to move in that direction, “Guijarro said in an interview with RNE.

Therefore, the Government is now not being brave or effective in the face of the power of the electricity companies, in the opinion of Podemos. It is also true that by “Government”, they refer to the PSOE.

Vice President Teresa Ribera contributed to keeping the internal tension in the Government high with her appearance in Congress the day before. He criticized power companies for showing “no social empathy” this year. Consumers will probably agree, but it is not certain that they will be very impressed by Ribera’s later phrase: “And I also want to make one thing clear. Although it sounds like a joke, social empathy is publicly traded.”

Yes, it may sound like a joke. If you look at the stock prices, you will not find many references to empathy, whatever that is in the case of legal persons. Capitalism does not work like that, because the value of a company on the stock market has more to do with its profits than with anything else.

August has been the month of the eight historical records in the wholesale electricity market. The upward trend in prices is repeated in all European countries in 2021, as a result of the sudden economic recovery, once the worst of the pandemic has passed, and the increase in the price of gas. Nevertheless, that impact is greater in Spain or Portugal for having a family income lower than that of France or Germany. Inevitably, that will have an impact on households, small businesses, businesses and inflation, as is already being seen.



The Government – or the PSOE – refuses to take the structural measures that Podemos demands, either because it considers them contrary to the criteria of the European Commission or because they are not effective. It has entrusted everything to an emergency measure such as reducing VAT with the consequent loss to the state coffers and to two bills with which it hopes to reduce costs by 15%. The latter may have the same fate as the old promises that were made on account of lower prices thanks to increased competition.

Unidos Podemos proposes to establish a fixed price for nuclear energy and another maximum for hydroelectric power, in the latter case with a system similar to that of renewable energies. Ribera discards it completely and justifies it by the prohibition by the EU of “establishing regulated wholesale prices” for “more than 25 years” and the same when dictating maximum or minimum prices. What is happening is that the rules of the game are a gift for the big companies in the sector. The high prices of gas and CO2 emission rights allow them to set even higher prices for hydroelectric, which in the end are what set the final price for the consumer.

Ribera herself admitted this in Congress, stressing that it is not reasonable that the hydroelectric plant “set the price” for 64% of the hours in July and 59% in August. This was especially striking in August, when several reservoirs in the northern basins were left almost empty by the voluntary decision of the companies. Can a reservoir be emptied if it pays for you in Spain? That is something we did not know until this summer.

It is disheartening to the least for consumers to learn that the vice president said it was “very likely” that what the companies had done with the reservoirs was “legal.” It was there that he referred to social empathy. Imagine a company that can increase its profits fictitiously and within the law and be told that it should not do so so as not to harm people who have real problems paying their electricity bill. Laughter would be heard throughout the Board of Directors.

The prices of basic services that are regulated by the Government are one of those issues for which elections are lost. In all Europe, the price of light is in an upward drift that seems unstoppable. Voters are going to take notice. “Are we going to see protests in the streets like those of the yellow vests (in France) or a repetition of the Swiss referendum? (where it was voted against raising taxes on a law on climate change). You are not going to get re-elected if you leave so many people below energy poverty. This is going to be a wake-up call for governments, “Thierry Bros, professor of energy at the Institute for Political Studies in Paris, told Bloomberg.

Regardless of the color of the vests, governments are not going to be able to blame Brussels or companies. Or they will, but it won’t work for them. Voters will judge them by what they have done in the previous four years. That can be a prohibitive bill for some of them.





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