No brake. The average daily price of electricity in the wholesale market will skyrocket this Monday to a new historical record, up to 124.45 euros per megawatt (MWh), pulverizing the previous record of 122.76 euros / MWh of last Thursday, August 26.
Water at the price of gas: the hydroelectric plant sets electricity prices for 75% of the most expensive hours of the year
It is the seventh historical maximum reached so far in August and it occurs on the eve that this Monday the third vice president and minister for the Ecological Transition and the Demographic Challenge, Teresa Ribera, appears in the Congress of Deputies to give an account of the rise in the price of electricity, which this month has smashed one record after another and points to the most expensive bill in history.
For this Monday, the price of electricity will mark a maximum of 132.92 euros / MWh -from 10:00 a.m. to 11:00 a.m.- and a minimum of 112.31 euros / MWh -from 3:00 a.m. to 4:00 a.m.-, according to data of the Operator of the Iberian Electricity Market (OMIE). The average price practically triples that of the same dates in August 2020, when it was 42 euros / MWh.
That month, with demand still sunk by the pandemic, the average wholesale market price was 36 euros. Now it will exceed 105 euros, an unprecedented figure. From August 9 to 13, it already had five consecutive highs. Then came last Thursday, with hydroelectric power once again setting prices in the most expensive hours of the day.
The previous record of Thursday was known shortly after on Wednesday the National Commission of Markets and Competition (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 applying penalties of up to 30% in the price of energy. Last Friday, Iberdrola, Endesa and Naturgy distanced themselves from these practices.
This context of increases in the so-called pool, in full economic recovery, is marked by the increase in the prices of CO2 and gas rights. CO2 emission rights have become more expensive to exceed 55 euros per tonne so far in August, when at the beginning of the year they were trading at around 33 euros. Meanwhile, the price of natural gas exceeds 46 euros per MWh, according to Mibgas data. Russia’s supply problems and strong demand from Asia have been compounded by concerns about supply through the Morocco-Spain gas pipeline as a result of the diplomatic break between Rabat and Algeria.
This upward spiral has caused a political storm and this week Más País, Compromís and Nueva Canarias have registered a petition in Congress to open a parliamentary investigation commission. The Government opened the door a few days ago to create a public energy company, as it has been asking for a long time from its partner in the Executive, United We Can, which has made a final proposal to the Government to lower the electricity bill that passes through limit the price of nuclear and hydroelectric energy by decree law. The spokeswoman for the Executive, Isabel Rodríguez, indicated on Tuesday that this proposal is going to be studied.
Before this spectacular spiral of increases, energy weighed on the bill around 24% (now around a third), while around 50-55% corresponded to tolls – the cost of transmission and distribution networks – and charges -the costs associated with the promotion of renewables, extra-peninsular ones and the annuities of the tariff deficit- and the rest, taxes.
The fluctuations in the daily price directly affect consumers covered by the regulated tariff (PVPC), just over 10 million, for which the cost of energy is directly linked to the prices of the so-called pool. The electricity companies have asked to reform this rate, which despite being subject to these ups and downs is the least expensive, according to experts, the National Commission of Markets and Competition (CNMC) and the Government.
On June 24, the Executive approved a Royal Decree-Law as a matter of urgency to reduce the taxes that are applied to the supply of electricity and, with it, the electricity bill of homes, the self-employed, SMEs and the whole of companies, which entail the reduction of VAT on electricity from 21% to 10% until the end of this year and the suspension of the 7% tax on electricity generation for three months. The increases in recent weeks have already eaten the effect of those tax cuts and August will close with the most expensive bill in history.