Dec. 20 (Bloomberg) -- Spanish Prime Minister Mariano Rajoy said the government is studying a new procedure to set electricity prices after a regulator refused to approve an auction that would had pushed rates up about 11 percent.
“This will be resolved before the end of the year.” Rajoy told reporters in Brussels. Yesterday’s “price auction result was unjustified and exaggerated,” he said.
Results from the quarterly sale of baseload and peakload power are used to determine what smaller consumers nationwide pay during the three-month period. The antimonopoly and power- system regulator said today it has been calling for changes for four years, and the government’s remarks were some of its strongest in backing the idea of altering the process.
“Their credibility is being put to the test right now,” said Jose Ruiz, a power industry analyst at Macquarie Bank in London.
The Comision Nacional de los Mercados & la Competencia blamed “elevated” market prices in recent weeks and “atypical circumstances” in the auction and informed Soria’s deputy and power-market operator OMIE of its decision at 4:15 a.m. Madrid time today.
The government will study modifications to how consumer prices are set so that the present situation doesn’t recur, Industry Minister Jose Manuel Soria said on state radio station RNE earlier today. “Electricity won’t rise 11 percent in January,” Soria said after his deputy was informed today that the antimonopoly regulator refused to validate yesterday’s auction.
Following yesterday’s power sale, the standard electricity rate was set to climb at least 11 percent on Jan. 1, according to data obtained yesterday by Bloomberg News.
The auction was “scandalous,” renewable energy lobby group APPA said in a statement. There is “a lack of competition.”
--With assistance from Todd White in Madrid and Marc Roca in London. Editors: Todd White, Francis Harris