The government it wants to force the large electricity companies to participate in auctions of term electricity sales contracts with stable prices, with the aim of making cheaper electricity with long supplies reach independent marketers and large industry. Auctions to which the large groups (Iberdrola, Endesa, Naturgy and EDP) would be forced to go to auction part of their electricity produced by nuclear, hydroelectric and wind.
The Executive’s plan is for the first of these auctions to be held this year, and it has already found the frontal rejection of the big electric companies against a measure that is part of the government shock plan to cushion the impact on the electricity bill of the spiral of increases in the electricity and gas markets.
Participation will not be an option for the large electricity companies, it will be an obligation to go to those auctions and transfer part of its production to independent marketers outside the large energy groups or directly to large industry so that it can contain energy costs in full spiral of rises. The Government emphasizes that its objective is to increase the liquidity of the term markets so that industry and marketers can access energy at reasonable prices and in a stable manner.
The large companies, in general, sell all or almost all of their electricity production to their own marketers, to subsidiaries of the same group, or to other clients. From the electricity sector it is denounced that hydroelectric and nuclear energy is already sold to end customers at a fixed price. “If auctions were held, term contracting would not increase, but energy would be taken away from some customers to be given to others. The energy is sold and there is no energy to auction without loss for customers who have already bought it & rdquor ;, complains one of the large electric companies.
According to the companies, their electricity production for 2022 is also already sold in a very large way, underlining that they have closed contracts in most cases for more than 80% of next year’s generation. Bilateral term electricity supply contracts include clauses to modify the conditions or to suspend it in the event that regulatory conditions change or due to certain price thresholds. The electric companies warn that they will have to activate these clauses if the Government forces them to go to that forced auction.
The groups also maintain that customers who were cautious and contracted the supply in time will be penalized, and those who preferred not to cover the risk of possible price increases will benefit. “Customers who buy that energy today would be left without supply due to force majeure. They take energy from those who have contracted at a fixed price to avoid risks of price crises and give it to those who have not protected themselves and have taken risks. The auctions would prevent the fulfillment of signed contracts & rdquor ;, denounce the companies.
Royal Decree 17/2021, through which the shock plan was articulated to contain the price of electricity, included an express mandate for the Government to hold the first of these auctions before December 31, 2021. A mandate that the Ministry for the Ecological Transition, commanded by Teresa Ribera, failed to comply and the year ended without the bid being held. The Government is now challenging the large electricity companies and is preparing to activate the plan so that the first of these auctions is held this year.
The amount of energy that they had to auction in the first of those auctions, initially scheduled for last year, was even predetermined: 15,830 gigawatt hours (GWh), the equivalent of 25% of the annual electricity production of the year with lower production of the affected installations. The distribution of the energy that each of the electricity companies must contribute based on their generation quota was already established: Iberdrola, more than 7,300 GWh; Endesa, 6,700 GWh; Naturgy, 1,400 GWh; and EDP, 360 GWh.
“25% of the generation is very affected energy, a lot of investment affected and many customers affected & rdquor ;, they sentence from the large electricity companies. For energy companies, auctions “create legal insecurity and make it difficult for industrialists to contract energy.”
The industry supports the auction
The industrial groups, on the other hand, support the holding of the forced auction to guarantee part of their electricity supply at reasonable prices. The big industry puts pressure on the Government to take urgent measures to achieve electricity at reasonable prices in a 2022 that they fear will be critical. From the Association of Large Energy Consumption Companies (AEGE) -in which giants such as ArcelorMittal, Acerinox, Sidenor, Sener, Ferroatlántica or Tubos Reunidos- it is denounced that the electricity companies are not offering them bilateral contracts in the midst of a spiral of price increases.
Large industrial groups with intensive electricity consumption – for some the electricity bill represents 50% and 60% of their total costs – have even been forced to stop production in their factories to avoid running at a loss due to higher prices. shot from energy, at highs since the summer.