Electricity quadruples price on last year with new all-time high on Monday: €154.16/MWh

The electricity price will hit a new all-time high on Monday, at €154.16 per Megawatt every hour (MWh).

The escalation does not reach its maximum limit yet –  it is the 13^th time prices have hit a new all-time record since mid-July. The previous one before then was in January 2012 at €103.76 per MWh.

While the average price throughout the day will be €154.16 per MWh, it will peak at €170 from 8 pm to 9 pm, and be lowest from 5 am to 6 am when it will cost €125.

The cost of the electricity bill will be 14% more expensive than seven days before and will quadruple that of September 13, 2020 (€35.06 MWh) – although prices back then were especially low due to the impact of Covid-19.

Public electricity company not short-term solution

Amid the rising prices for electricity, the debate of whether a public electricity company would help avoid sharp increases has reignited.

Yet, according to the experts contacted by the Catalan News Agency, setting up a public company from scratch would be expensive and complex. This would only work in the long run, according to Rubén Sánchez, who works for the consumers' entity Facua.

Instead, encouraging the generation of renewable energy through legislation is regarded as the best option in the short term.

Roger Medina, researcher at Institut Ostrom, says that an electricity supplier constantly receiving public funding in order to keep the prices low "would go against EU law, because that would mean public aid incompatible with the market."

"A public company cannot at the same time act as operator and regulator of the market."

Sources of Barcelona Energia, a public supplier who has not been able to escape the escalation despite selling 100% renewable energy, say that "the current electricity trade system means that the global increase affects the purchase of all energy, therefore, of all suppliers, whether they are renewables or not."

Spain will not regulate market

This Spanish government recently 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, she also recently stated that her government is considering lowering the tax on electricity in order to ease the impact on households. 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 pricier than it was a year ago when prices decreased following a drop in demand during the height of the pandemic.

Experts warn that soaring prices are not going away any time soon. José Bogas, CEO of Endesa, the largest electric utility company in Spain, said in an interview that high prices will remain until the second quarter of 2022.

According to him, this phenomenon is neither the government's nor the companies' or the customers' fault. He argues that the same trend is happening across Europe, but that it is "slightly" greater in Spain due to the use of air conditioning.

Bogas is not alone in believing prices are here to stay, for now. "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.

'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.