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HomeLatest NewsThe IEE describes Ribera's proposal to reform the electricity market as necessary

The IEE describes Ribera’s proposal to reform the electricity market as necessary

Date: June 19, 2024 Time: 01:42:30

The Institute of Economic Studies (IEE) has criticized the reform of the European electricity market proposed by the Spanish Government and has defended the position of “betting on a unified system of rules in Europe”, in order to eradicate fragmentation and avoid a union of the population to through different laws depending on the country.

It is one of the main conclusions that are collected after the press conference that has been held this Tuesday to present the report on ‘Good regulatory practices, a proposal for the Spanish electricity sector’, as indicated by the president of the IEE , Niñigo Fernandez de Mesa.

Likewise, the president gave his opinion on the structural reform of the electricity market and stated that “it should not be motivated by exceptionality” due to the current crisis due to the war in Ukraine, but “by the good regulatory practices that have inspired the creation of the market interior throughout the last decades”. For his part, he was of the opinion that the market reform proposed by Spain for greater price control with the massive introduction of so-called forward contracts for differences (CfDs), regulated prices for nuclear and hydraulic and capacity contracts, “adolescence with serious deficiencies”.

The scarcity or abundance of energy

On the other hand, the president of the IEE said that “we must be aware that encouraging each country to regulate the electricity sector in its own way harms us.” In other words, apart from the measures that have had to be taken on a temporary basis as a consequence of the war between Ukraine and Russia, Spain should clearly bet on a unified system of rules in Europe,” he added.

Faced with the previous scenario, the CEOE ‘think tank’ advocated a system where forward contracts are “defended” and there is a marginalist system that “launches price messages in the markets and the market can adjust to scarcity or abundance of energy.”

The investment will be transferred outside of Spain

In the context of the investment, Fernández de Mesa assured that the existence of a single European electricity market is “absolutely fundamental”, since if there is a ‘cap’ (price ceiling) in Spain “well below the European one, people is going to invest outside of Spain and is not going to invest in Spain”, evidently, pointing out that it is “essential” to preserve legal stability and regulatory orthodoxy.

The study also highlights that the institutional framework in Spain, in terms of governance indicators related to regulatory quality and compliance with the law, “is not in line with the EU average”, where Spain ranks 25th. out of 30 countries in terms of regulatory quality and ranked 23 out of 30 countries in terms of legal certainty, with “a significant drop” in both rankings.

Failing to take necessary action

On the other hand, IEE was also in favor of the elimination of the regulated tariff for electricity consumers, the so-called Voluntary Price for Small Consumers (PVPC), and considered that it should only exist exceptionally for the “last resort”. .

Thus, despite estimating that the reform approved last week by the PVPC Government, which seeks to provide more stability to final consumer bills by giving progressively greater weight to futures markets, is better than the existing one, the ‘ think tank’ assured that a regulated electricity tariff in the electricity retail market may be “unnecessary and overlaps with solutions already provided by the market.”

Likewise, considering that this regulated tariff should not exist, they added that the collection of the electric and thermal social bonuses received by vulnerable consumers must be separated from it, which will probably be merged into a single aid instrument for these consumers with the aim of facilitate the payment of the energy bill.

Finally, the IEE criticized the “extraordinary and unequal” measures adopted by Spain to face the crisis in Ukraine, such as the establishment of a tax on income for companies instead of applying on extraordinary profits as established by the European Regulation, among others.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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