Thursday, 16 February 2012

Spanish electricity, the most costly in Europe

Plant at Aldedávila,
Prices are third in line behind Cyprus and Malta
SPAIN This not come as a surprise to many of our readers, but the latest report from Eurostat places Spain as the mainland country with the highest electricity prices. Only Cyprus and Malta charge more for power. The typical Spanish home, according to Eurostat uses between 2,500 and 5,000 kW/hr, which here are charged over what is considered the 'psychological barrier' price of €0.15 per per kilowatt/hour (kW/hr). The organization does not evaluate the reasons behind the prices, but the debate has raged for a number of years about why the price of Spanish electricity continues to rise. This year, in fact, prices were not raised on January 1st, unlike every other year for at least seven - the reason behind that is more political than anything else, however (see below). Nevertheless, the regular power companies (using nuclear power, for example) blame the subsidies given to alternative renewable energy power companies (e.g. wind or photo-voltaic). On the other hand, the latter accuse the former of getting grants for plants that have long been paid for, and for taking advantage of the wholesale pooling market, which rises regularly. Electricity prices in Spain have risen sharply since 2004 - 80% before tax, according to Eurostat, which says that in 2004 we paid €0.0872 per kW/hr, and we now pay €0.1597. There is a question, though, about whether the increases that have happened over the years are sufficient.>>>For over ten years, the Spanish electricity system has been carrying what is called a 'tariff deficit'. In other words, however much prices may have increased, they have not been enough to cover costs.

The matter is one that is going to have to be dealt with by the new PP government, which decided that it would not allow any increase at the beginning of the year. Normally, the price rises every three months, but when the PP was in opposition it always said it would free electricity costs. Now in government, the party realizes that it can't.

In order to put at least a temporary stop to the increases, though, the government will have to look closely at cost cutting within the system. Chances are, then, that a tax may be imposed on the 'normal' companies (who will undoubtedly pass it on to their millions of customers) for using nuclear and hydrological power, and more cuts on subsidies to the renewable energy ones.

Meantime, make sure you turn off that light when you leave the room.

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