Spain Would Benefit From Secondary Market for Gas, Nadal Says

Spain, Europe’s biggest importer of natural gas from ships, would benefit from having a secondary market for the fuel, Deputy Energy Minister Alberto Nadal said.

“We don’t have a secondary market for gas and it would be good to have one,” he told an energy conference in Madrid today, without elaborating.

The government is considering its options to address a widening gap that’s emerging between the price consumers pay for gas and the cost of supplying it, he said.

Spain is overhauling its energy regulations as part of efforts to make the country more competitive and address supply imbalances. Just as the government is taking steps to eliminate a similar deficit between the cost of generating power and the price charged to consumers, a similar gap is emerging in the gas industry.

Spain’s antimonopoly and energy regulator, known as the CNMC, forecast on Jan. 7 that the so-called gas tariff deficit would amount to 813 million euros ($1.1 billion) in 2014 as regulated revenue would cover just 88 percent of costs. The watchdog urged the government to come up with rules requiring all regulated costs to be covered.

Nadal said the gas deficit is an issue that will be tackled this year, without giving details.

At the same time, his department is working on a new mechanism for setting consumer power prices after the December auction that fixes first-quarter prices was invalidated amid irregularities. The CNMC’s investigation of the tender cited “atypical circumstances” in the days before and during the bidding, including a surge in spot-market prices and disruption of natural gas deliveries.

The new system, which will be presented in the “coming weeks” will aim to set prices for longer than one quarter and should be immune to “events in the market that happen in the preceding days or at the time of the auction,” Nadal said.

“No Treasury in the world would sell public debt on the day Lehman Brothers collapsed,” he said, adding the new system needed to be “more flexible.”

Before it's here, it's on the Bloomberg Terminal.