The big industry puts pressure on the Government to take urgent measures to achieve electricity at reasonable prices in a 2022 that they fear will be critical. Large industrial consumers are trying in extremis to get the Ministry for Ecological Transition to force electricity companies to subscribe contracts at prices far from the levels reached with the current spiral of increases.
The Government’s shock plan to cushion the impact on electricity bills of the rises in the electricity and gas markets included temporary measures (with reductions in taxes and the regulated part of the bill) and others that seek be durable. Among the latter, the Government included the celebration of sforced auctions of electricity purchase contracts term with stable prices and with a duration of more than one year.
Some auctions to which the large electricity companies (Iberdrola, Endesa, Naturgy and EDP) were compelled to go to auction part of their electricity produced by nuclear, hydroelectric and wind power to sell it to independent marketers (those not integrated into large energy groups) and large industrial consumers.
The royal decree that included the measures of the shock plan established that the first of these auctions should be held before the end of 2021. A deadline that the Government let pass and did not meet, as advanced El Periódico de España. Now big industry is calling on the government to urgently launch forced auctions to obtain electricity at competitive prices.
“Neither the Ministry for the Ecological Transition launches the auctions nor are the electricity companies offering us contracts with reasonable prices as they promised. We need energy at competitive prices by 2022”, explains Fernando Soto, general director of the Association of Large Energy Consumption Companies (AEGE), in which giants such as ArcelorMittal, Acerinox, Sidenor, Sener, Ferroatlántica or Tubos Reunidos.
More than a month without contacts
The Ministry commanded by Vice President Teresa Ribera is in charge of launching the auction, but it still has not activated the legal mechanisms to do so and the department has not commented on whether there are plans in this regard. From AEGE it is pointed out that the last contact with the Ministry occurred more than a month ago, but they trust in a meeting soon to discuss possible measures so that large industry can lower its electricity bill.
For large electricity companies, it will not be an option to participate in these auctions, it will be an obligation go to them. The amount of energy that had to be auctioned in the first of these auctions was even predetermined: 15,830 gigawatt hours (GWh), equivalent to 25% of the annual electricity production of the year with the lowest production of the affected facilities. And the distribution of the energy that each of the electricity companies must contribute based on their generation quota had even been established: Iberdrola, more than 7,300 GWh; Endesa, 6,700 GWh; Naturgy, 1,400 GWh; and EDP, 360 GWh.
From the large electricity companies they have been insisting on the impossibility of holding the mandatory auction urgently. The companies argued that they could not provide electricity last year to auction because they had already sold all the energy production for 2021 and that their electricity production for 2022 is also already sold in a very large way, stressing that they have closed contracts in most of the cases for more than 80% of next year’s generation.
Large companies generally sell all or almost all of their electricity production to their own marketers, to subsidiaries of the same group. The intention of the Government with these auctions is to increase the liquidity of the term markets, forcing part of that production to be transferred to independent marketers outside the large energy groups or directly to large industry so that it can contain energy costs in full spiral of rises.
Reasonably priced contracts
The great electrics take it for granted that the government will be vigilant in the coming months and that yes, it will activate the forced auction mechanism in 2022 if it detects that the companies are not offering energy at reasonable prices -with levels prior to the energy crisis- to large customers or are not renewing supply agreements under stable conditions.
A circumstance that, according to the AEGE complaint, is already taking place. “It seems that the Government does not call the auction in exchange for electricity companies offering electricity contracts at competitive prices. In the end, we are having neither one nor the other”, complains Fernando Soto. “Any measure that involves decoupling the price of our electricity supply from gas prices would already be attractive to the industry.” Therefore, the groups also ask as an alternative that the plants of renewable energy that have a guaranteed remuneration (Recore regime) contribute their electricity production at a fixed price for use by large consumers.
Large industrial groups with intensive electricity consumption -for some the electricity bill represents 50% and 60% of their total costs- they have even been forced to stop production in their factories to avoid running at a loss due to skyrocketing energy prices, at their highest since the summer.
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Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.