Imports likely to be restricted in bid to boost competition

The Spanish government has announced a series of some 50 measures aimed at fostering competition in the energy market, including plans to ban major power players from importing energy in a bid to increase competition and boost generation.

As part of the energy scheme, the government plans to increase regulatory control on dominant operators – those with more than a 10% stake – in the gas and electricity sectors. Those likely to face action under the new rules include Endesa, Iberdrola, Union Fenosa and Gas Natural, while Repsol YPF is the dominant oil operator.

The Economy Ministry has undertaken a far-reaching review of the regulation of the energy sector, which is due to conclude in the second half of 2005, before a new regulatory framework is approved before the end of the year. The package includes the suspension of the payment of Competition Transition Costs to the country’s utilities, a measure introduced in 1997 to cover cost stranded by liberalisation measures and triggered by an electricity strike price of below €36.1/MWh. The government is also likely to ease regulations which prevent shareholders from holding a significant stake in more than one dominant power firm. Shareholders are currently limited to voting rights of 3% in these companies if they have a stake of this size in two or more of them. The plans will also see the transfer of costs for nuclear waste management to utilities from electricity consumers. Under the measures utilities owning nuclear plant could collectively face €90 million in costs this year and an annual €120 million subsequently.