Spanish Socialists Vow to Stop Power Lobby Writing Its Own Rules

  • Power prices should reflect different technologies' costs
  • Socialists may ask EU for more time to privatize Bankia

Spain’s Socialists will limit big power companies’ influence over electricity-market regulation if they take office after December’s general election to create room for more competition, the party’s economic adviser said.

Prime Minister Mariano Rajoy, who has a slim lead over the Socialists in recent polls, has given the power-industry lobby too much leeway to shape the rules of the game to shut out potential competition, Jordi Sevilla said in an interview Monday at the party’s Madrid headquarters. A recent decree setting levies for companies and families that generate their own power from solar panels “seemed like it was dictated” by the lobby, he said.

“The government has passed a decree that looks like it was designed to prevent people generating their own power,” Sevilla said. “We have to try to stop them having the veto power that they’ve had at other moments in history.”

The relationship between Spain’s politicians and the country’s biggest companies is among the hottest topics of debate as Rajoy reaches the end of a first term that saw him borrow 41 billion euros ($47 billion) to salvage the financial system after political appointees in charge of some savings banks ran amok. Former Deputy Prime Minister Rodrigo Rato is facing criminal charges in the National Court relating to the collapse of Bankia SA when he was chairman. He denies any wrongdoing.

Sevilla said the Socialists may seek to extend the deadline for privatizing Bankia beyond the December 2017 legal deadline to get a better deal for taxpayers.

Insurgents’ Threat

The financial collapse, the recession it engendered and the frequent reports of politicians taking kickbacks have seen support for Spain’s two main parties fall to historic lows. After governing in turn for the past 33 years, the traditional groups face a challenge from pro-market Ciudadanos and anti-austerity Podemos which are both, in their different ways, promising to clean up the political system.

Ciudadanos has 18 percent support according to a Demoscopia poll for Antena 3 television station released on Monday. That’s enough to make its leader, Albert Rivera, the kingmaker in December with Rajoy’s People’s Party on 27 percent and the Socialists on 21 percent both way short of a majority.

The power sector has been at center of the political debate in recent years as Spain electricity prices are above the European average hurting the economy’s competitiveness and adding to the burden on families. Rajoy’s Socialist predecessor, Jose Luis Rodriguez Zapatero, added to the problems by introducing aid for photovoltaic power in 2007. Those subsidies threatened to bankrupt the power system and the government had to cut them back, hurting many investors who’d banked on the 25-year price guarantees.

Under another Socialist administration, power companies will see differentiated prices to reflect the costs of generating with different technologies, said Sevilla, without providing further details. Such a plan may concern utilities like Iberdrola SA and Gas Natural SA that run many of Spain’s low-cost hydro plants.

EU Cooperation

Sevilla, who served as minister for public administration during Zapatero’s first term, was an economist at PricewaterhouseCoopers in Madrid from 2008 until last summer, when he returned to politics to work with Socialist leader Pedro Sanchez. He’s working on economic policy for the party’s election manifesto.

A Socialist-led government may seek to review Spain’s budget-deficit targets once the accounts for 2015 have been completed but will work hand-in-hand with the European Commission in that process, Sevilla said. In the past month, Rajoy has clashed with officials in Brussels who said his pre-election spending pledges will see Spain miss its budget targets this year and next.

“We will have to wait to see 2015 closed and the situation of the economy, as several indicators point toward a slowdown,” said Sevilla. “We will work together with the European authorities. We won’t do anything against them or without them.”

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