Spanish government 'considers intervention' in wholesale power market

The Spanish government is considering intervening in the wholesale electricity market to limit the impact on consumer bills of rising CO2 and gas prices, power industry sources said May 28.

In the coming days the Madrid government may propose a measure to reduce the market revenues of generators equivalent to the impact of carbon allowance costs on wholesale power prices, sources who preferred not to be named told S&P Global Platts.

The Spanish Ministry of Ecological Transition told S&P Global Platts there was nothing on the immediate agenda relating to such a measure.

A ministry spokesman confirmed, however, that Ecological Transition Minister Teresa Ribero had said on May 13 that the government was working on a plan of action to address the impact of CO2 prices on consumer bills, but within the margins permitted by the EU.

Any intervention could be applied to the revenues of zero-carbon generators such as hydro and nuclear operators, in a re-run of similar policy measures adopted by Spain in 2007 and 2013.

Asked to comment on the possibility of political intervention, Eurelectric Secretary General Kristian Ruby said such a measure "highly concerns the power sector since it would introduce regulatory instability and distort proper market incentives to invest not only in future renewables, but also to operate existing non-emitting assets."

"It basically means that generators would be double-charged, putting their revenues and ability to invest in new generation capacities at risk. Tampering with prices politically is like poison for investor confidence," Ruby said.

Spanish day-ahead power prices on the OMIE exchange peaked at Eur108.59/MWh in early January during a cold snap, remaining consistently high through April and much of May, settling at Eur87.43/MWh ($106.48/MWh) May 27.