The Dec. 19 auction of power futures used to set prices for 16 million Spanish consumers lacked “competitive pressure,” the nation’s regulator said, vowing further investigation into the voided sale and its participants.
In its deepest analysis yet of the auction, the regulator known as the CNMC said “atypical circumstances” in pricing and trading volumes in the days before and during the auction supported its Dec. 20 decision not to validate the sale, according to a statement released late yesterday by the CNMC.
Spain’s government also overrode the results of the auction, the first time the benchmark sale was thrown out in 25 quarterly auctions, which are generally held between power companies and traders. Instead the state mandated a 2.3 percent price increase and pledged to devise a new method for letting market forces continue to influence rates.
The regulator, which has been calling since 2009 for the government to change how consumer power prices are set, said it will continue to probe the tender. The result of the auction, had it been accepted, would have pushed up prices by about 11 percent on Jan. 1.
The commission “affirms that ‘atypical circumstances’ concurred that impeded bidding from developing in an environment of ‘sufficient competitive pressure’,” the CNMC said in summarizing the conclusions of its supervisory board.
In the 17 days prior to the auction, spot-market prices -- which can influence futures -- jumped to the highest since 2002, or as much as 70 percent from the previous week, the CNMC said, without identifying a cause.
“These prices were transferred immediately to futures markets, and in particular, the product traded in the 25th auction,” the regulator said. As a result, the next-quarter futures advanced 7 percent in the auction, and fell about 15 percent in subsequent days, the CNMC said.
During the auction’s first round, participants withdrew more futures for negotiating than in any first round of the previous 13 sales. The bidding concluded in the seventh round, whereas all previous sales had run to at least 12.
The government has struggled for more than a decade to keep power expensive enough for investor-owned generators such as Iberdrola SA (IBE) and cheap enough for owners of businesses and households that vote and have no alternative to regulated rates.
At the same time, suppressing power prices has helped curb the official consumer inflation rate, currently accounting for 3.33 percent of the basket of goods used to calculate it, according to data from the National Statistics Institute.
Unesa, the power industry lobby that’s fighting a separate battle with the state over taxes and subsidies, has denied any wrongdoing by energy companies and challenged the government to present evidence. Dictating a 2.3 percent increase for Jan. 1 was a “backward step” in the process of liberalizing the power market, Unesa said.
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