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An austerity-driven energy reform

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  • Espinosa Alejos, María Paz

Abstract

In July 2013, the government approved a major overhaul of the Spanish electricity sector to correct existing imbalances that have led to an exponential increase of regulated electricity costs and a huge tariff deficit. The reform addresses the problem of financial sustainability of the sector, severely affected by weak demand and overcapacity. Previous regulation introduced in 2012 and early 2013, also aimed at restoring financial stability of the sector, failed to correct the tariff shortfall and new regulatory measures were needed to reduce the 4.5 billion euros forecasted deficit for 2013. The frequent change of the rules of the game in the sector has created regulatory uncertainty, more so as it is not clear that the present reform will be sufficient to eliminate the deficit. Moreover, the government has left the door open to new regulation that would deal with the price formation system. In general, short run financial criteria have prevailed, while efficiency principles and a long run perspective have little weight in the reform.

Suggested Citation

  • Espinosa Alejos, María Paz, 2013. "An austerity-driven energy reform," DFAEII Working Papers 1988-088X, University of the Basque Country - Department of Foundations of Economic Analysis II.
    • Handle: RePEc:ehu:dfaeii:11380
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    File URL: https://addi.ehu.es/handle/10810/11380
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    References listed on IDEAS

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    1. Ciarreta, Aitor & Espinosa, Maria Paz & Pizarro-Irizar, Cristina, 2014. "Is green energy expensive? Empirical evidence from the Spanish electricity market," Energy Policy, Elsevier, vol. 69(C), pages 205-215.
    2. Holburn, Guy L.F., 2012. "Assessing and managing regulatory risk in renewable energy: Contrasts between Canada and the United States," Energy Policy, Elsevier, vol. 45(C), pages 654-665.
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    1. Ciarreta, Aitor & Espinosa, Maria Paz & Pizarro-Irizar, Cristina, 2014. "Is green energy expensive? Empirical evidence from the Spanish electricity market," Energy Policy, Elsevier, vol. 69(C), pages 205-215.
    2. Saska Petrova & Alexandra Prodromidou, 2019. "Everyday politics of austerity: Infrastructure and vulnerability in times of crisis," Environment and Planning C, , vol. 37(8), pages 1380-1399, December.

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