I’m afraid my love for Spanish electricity companies is still at its lowest point. After the new laws on photovoltaic solar panels and after the rise in the electricity bill of almost 80% from 2004 to 2014, it is more of a hate relationship. In this new article by Pacheco Architects, we explain the reason for the cost of Spanish electricity.
Spain have the most expensive electricity in Europe
I decided to do some in-depth research to find out why we have the most expensive electricity bill in Europe, so maybe I can win back my lost affection for power companies. It could well be that producing a Spanish Kw of electricity costs more to produce here than anywhere in Europe.
Armed with patience and after a few days researching on the web, I found some articles written by the journalist David Page Polo, which led me to the book entitled: “The Frankenstein Report“, written by Iñaki de las Heras, a real bomb. These upcoming articles are based heavily on the writings of these two extraordinary journalists.
Europe’s largest electricity bill
They explain why in Spain consumers bear one of the highest bills in Europe (only behind Cyprus and Ireland), after suffering a spectacular increase in the bill of 72.5% between 2004 and 2014.
And yet, consumers have to absorb a debt close to 30,000 million euros, because we do not pay enough to cover all expenses. Not the real costs (what it costs to produce electricity and bring it to homes), but the costs that regulation has created. And between those costs that are not costs, but the law says they are, and cannot be justified, and others that are grossly overinflated.
How the famous debt of 30,000 million euros was created
The book exposes three decades of excesses of all the agents of the Spanish electricity sector. And he does so by denouncing this farce without dogmatism but with brutal honesty.
It is a system that now has a surplus of about half of the electrical generation capacity due to the large investments that have been made in new installations with an anticipated consumption of unbridled optimism.
A system that for a few years made Spain the world’s leading power in renewable energy, for example, and now the Government is desperate to prevent it from continuing to grow (in some cases uncontrollably), which has led Spain to overtake Venezuela as a country. with the largest international arbitration claims.
A unique system in the world
In recent years it has become a regular topic of public debate with the desire to fight among themselves to find the culprit of such an enormous debt (30,000 million euros). And each of the protagonists (and their lobbies) accusing, of course, the rest of the parties.
Traditional electricity companies accuse renewables of taking millions of euros in premiums for years. The main electricity companies that operate wind farms, however, point to solar energy as the real culprit.
Renewables denounce the bonuses received by traditional nuclear and hydroelectric plants, as a bastion of waste. And everyone blames politicians for allowing this waste of public money.
And among so many biased versions driven by personal interests, this report now points out all the causes of a sick electrical system. And he does it without ties, but without false equidistances, attacking everything, without casting false blame like those who don’t want to blame anyone.
The journalist Iñaki de las Heras published the “Frankenstein Report”. That’s why when we press the electrical switch the electrical system sinks.
It is powerfully striking how regulatory excesses have created a horrible creature for thirty years.
And few scary stories end well
The case of the electricity deficit is an example of how the confusion of public and private interests and the double game, apprehension about regulations, poor planning and market failure can produce disastrous results.
Companies that benefited at the expense of general remuneration that has resulted in consumers now having to pay very dearly for electricity, which not long ago was at a reasonable price.
A failure of Spanish politicians and their obligations not only to pursue the general interest, but also to discern what particular interests are hidden behind the apparent general interests, and what has been the central issue for decades.
The five causes
This fantastic report (hard report, as well as a good book, as well as a great story) identifies five general causes that made possible the creation of the Spanish electricity deficit -as it is known-, which is the debt between recognized income and recognized costs.
Five causes intertwined for decades:
- The decision to open the door to the payment of electricity in instalments, hand in hand with the accumulation of debt -instead of paying the standard price-
- The enormous costs that have been added to the bill, were tips or were mere aid under the table for the large electricity companies
- The decision of politicians, either due to electoral or social sensitivity (to be decided), to postpone increases in electricity prices and not address the real causes of the increase in costs
- The collapse of consumption as a result of the economic crisis submerged the income system and made it impossible to cover recognized expenses
- All this seasoned with regulatory errors that, harmed the management of the regulated part of the bill, gave rise to a dysfunctional market.
Almost 30,000 million euros of debt that Spanish users finally have to pay to the industry. And these companies, hand in hand with governments, have managed well so that an entire country becomes indebted to banks and investment funds… and with interest, of course.