On Monday, the price of electricity in the Spanish state reached a new historical record when it hit 106.74 euros per megawatt hour (MWh), beating the previous record set last July by about twenty cents. Thus, it is very understandable that citizens are concerned, and as well, the vast majority do not know exactly how much this will affect their overall cost of living, as everything is going up except their income, especially if they are pensioners.
It is much easier to understand if we consider how much a MWh cost exactly a year ago, on August 10th, 2020. And when we do that, we do indeed have to stop and take a breath, because on that day the charge for this unit of power was 38.09 euros, not much more than a third of the current figure. We have had to get used to checking the price of power at the cheapest times of day, in order to plan, if possible, our consumption and use of appliances, and lower our bills. Some people have even proposed, without the slightest embarrassment, that it would be best for people to get used to, for example, doing the ironing at night.
We talk about the price per megawatt/hour in the same way that, during the financial crisis from 2008 to 2014, we had to learn about risk premiums and bond spreads, comparing the return on Spanish bonds with that of German ones, a statistic which rose up to 616, placing us in the zone for a financial bailout. Or now, with the Covid-19 pandemic, we also seem required to be familiar with indices such as the number of infections, the EPG outbreak risk, the Rt transmission rate and the IA7, the cumulative incidence over seven days.
The Spanish government, meanwhile, limits itself to acting as notary on the rise of the electricity price and to predict through the deputy PM and minister of ecological transition, Teresa Ribera, that it will continue to rise. The short-term fiscal measures the administration has adopted, such as lowering VAT, have ended up as nothing more than patches on the problem, which is why consumer organizations have spoken of an unacceptably passive stance by the Spanish government. The truth is that the PSOE-Podemos government, with a minister like Alberto Garzón from left-wing IU as consumer affairs minister, is right there in the middle of it all, although, due to his eloquent silence, one might have completely forgotten that he is a member of the executive.
Now, the next price rise that is about to land on us has to do with the heat wave that has been forecast from the middle of this week and the resulting peak in electricity consumption from air conditioning use. The Spanish government still has room to lower electricity bills by reducing VAT to 10% and reducing the tax on electricity generation to 7% or below and, at the same time, addressing the transformation of Spain's energy model in depth.