The cost of electricity for domestic consumers in Spain is the sixth highest in the European Union, according to a recent report. Only households in Denmark, Germany, Cyprus, Ireland and Italy pay more, even though Spain’s own energy costs such as generating, transport and distribution are among the lowest on the continent. The study, ‘Comparative analysis of electricity prices in the European Union: a Spanish perspective’, was carried out by David Robinson, a researcher at the Oxford Institute for Energy Studies.
Among other aspects, the report compares what domestic users - those in the consumption band between 2,500 and 5,000 kilowatts/hour per year - paid for electricity in each EU country in the first six months of 2013 and it concluded that for every 100 euros billed to households in Spain, 51 were for additional costs. These included the special regime premiums, (renewable, co-generation and treatment of residue), the costs of supplying electricity to the islands, coal subsidies, tariff deficit annuities and taxes (on electricity, and IVA).
These additional charges are what the researcher called the ‘government wedge’ and on average in the 27 countries in the European Union at that time it amounted to 31 per cent of the final bill. According to the study, this government wedge reduced considerably for medium and large businesses, which benefit from the possibility of paying a substantially lower share of the taxes and other access charges and can also recover the IVA.
So, in the first half of 2013, Spain held 17th place in the EU in terms of prices for major industrial consumers (annual consumption of between 70,000 and 150,000 megawatts/hour). In that same period, and for medium-sized industries (between 500 and 2000 Mw/h) Spain was in ninth place.
The report reveals that between the second half of 2007 and the first half of 2013, the prices for Spanish domestic consumers rose by about 59.1%, moving from just below the EU average in 2008 (Spain was in 12th place) to being well above average last year.
Another of the study’s conclusions is that the domestic tariff has increased more rapidly than the EU average between 2008 and 2012, while the price to wholesale markets (the cost of putting the energy into the network) has, to a large extent, followed the stable trend of other European countries.
Professor Robinson points out that an increasingly small portion of the final electricity price in the EU is linked to the evolution of the market or the regulation of the activities of networks, compared with aspects that depend on political decisions. The ‘government wedge’ is increasing throughout Europe, but the increase has been larger in Spain than in most of the other countries, especially for the smallest consumers.