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    Ribera raises suspending the reduction of income from electricity by gas


    October 7, 2021 - CE Noticias Financieras

     

      Electricity prices continue to rise to hitherto unsuspected heights, pushed by natural gas prices, both in Spain and in Europe. For this Thursday, the average price of the wholesale market (pool) stands at 288.53 euros/MWh, below France, at 298.32 euros/MWh, 5% more than a week ago, and surpassed by Germany, Holland or Belgium, which exceeded for the first time the barrier of 300 euros/MWh (302 euros).

      A full-blown energy crisis that borders on a national emergency and could force Europe to intervene in the markets, according to political sources. The situation is considered so serious that, according to the same sources, the Ministry for Ecological Transition is considering suspending or modifying the mechanism for reducing the income received by hydro, nuclear and some renewables that go to market for the benefits they receive when gas marks the marginal price in the pool.

      The sharp increase in prices since September 14, when the royal decree law came into force that includes this measure, which is pending validation in Congress, has led the Government to reconsider, as it would mean, for gas prices above 100 euros / MWh, almost double the cut in revenue to the big three electricity companies, Endesa, Iberdrola and Naturgy, initially set at 2,600 million euros.

      Precisely, the Vice President for Ecological Transition, Teresa Ribera, has convened from today a round of meetings with the heads of these companies (the CEO of Endesa, José Bogas, the president of Iberdrola, Ignacio Galán, and the president of Naturgy, Francisco Reynés), to discuss the issue and seek solutions. The companies outlined their proposals yesterday.

      The aim of the controversial royal decree law (RDL) was that electricity companies would make their contribution to alleviate the bill of small electricity consumers with those 2,600 million (2,000 million would be assumed by the big three), which would be used to reduce the charges of the tolls of receipt. In any case, even if a change in the regulation is addressed, the Government's objective is that the companies contribute to the solution. The options are the postponement of the rule or a modulation of the same that does not involve "such a serious expropriation" of income, business sources indicate. A few days after its entry into force, the ministry had to rectify its content through a letter to the system operator, REE, which exempted from this reduction to bilateral contracts signed between a producer and a final customer, but kept it for contracts between generators and marketers of the same business group. That is, the large electricity companies.

      Producing at a loss

      The situation has worsened so much, with gas prices and the generation of combined cycle power plants soaring, that the affected plants could be forced to sell at a loss. Industry sources believe that, if the RDL remains as it is, the ministry would be forced to continue making corrections. In this sense, prefers to raise new options to companies. Ribera had shown its willingness to revoke the measures if it achieved an effective agreement with the European Union to address the crisis.

      The formula established by the RDL is to subtract the price received by these energies whenever the gas plants are above 20 euros MWh, quotation is multiplied by 0.9 euros and the hours in which the gas has marked the marginal pool and divided by 0.55%, which is the emission factor of gas. It so happened that last Sunday 2,000 MW of wind power withdrew their bids from the market in the cheap hours when prices were below what they would have to return those parks: 72 euros/MWh.

      The regulation obliges the plants to make their bids, although not at a loss, but they cannot withdraw afterwards. This is why the CNMC has opened a file to the owner or owners of the 2,000 that left on Sunday.

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