€141.71 per MWh: new all-time high of electricity costs peak could last until next spring

For the 11th time since mid-July, Spanish residents will pay record-high rates for electricity, this time on Thursday.

Averaging at €141.71 per MWh an hour throughout the day, it will be most expensive – €155.62 per MWh – from 9 pm to 10 pm, and cheapest – €120.92 MWh – from 5 am to 6 am.

That is, Spaniards who have a contract in the regulated electricity market will pay three times more than they did on the same day last year, when it cost €46.

Before this summer, prices had last broken records in January 2012, when a MWh cost around €103.76.

Spain will not regulate market

This comes only days after the Spanish government stated that it would not step in to regulate prices.

In a four-hour appearance before Congress, Spain's ecological transition minister, Teresa Ribera, said that doing so would be "against EU law."

Yet, on Wednesday, she said her government is considering lowering the tax on electricity in order to ease the impact of the current episode of high prices – in late June, Madrid already decided to lower the VAT for electricity from 21% to 10%. 

Reasons for soaring costs

Attributed to the rising cost of the gas used by combined cycle power plants as well as carbon emission trading and the limited use of renewables, electricity is now much more pricier than it was a year ago when prices decreased following a pandemic-related drop in demand.

Experts had already warned that soaring prices were not going away any time soon.

José Bogas, CEO of Endesa, the largest electric utility company in Spain, said in an interview this week that this peak of prices will only be gone in the second quarter of 2022. 

For him, it is neither the government's nor the companies' or the customers' fault the fact that switching on the washing machine is three times more expensive than last year. He argued that the same trend is happening across Europe, but with Spain having "slightly" higher values due to the use of air-cons.

"We have to get used to seeing these prices until the end of the year," Marc Bonet, who is in charge of business development at Barcelona Energia, told the Catalan News Agency in a recent interview.

'Lack of transparency' of some companies

New tariffs came into force on June 1, with higher, middle, and cheaper rates.

Spain's competition regulation authority (CNMC) expressed concerns that some companies made the most of these changes by raising prices by up to 30% more than what the tariffs allow without warning their customers.

CNMC denounces a "lack of transparency" of several companies – whose names have not been revealed – and calls for those affected to be compensated.