Denial of big power companies
The government announced a plan to control electricity prices through mandatory auctions where major energy producers would offer fixed price contracts for more than a year. By the end of summer 2021, the first auctions were supposed to be organized for large electricity suppliers to transfer a portion of their output to independent marketers and smaller distributors. The idea was for major utilities that generate electricity from nuclear, hydro, and renewables to participate in a market where independent distributors and smaller customers could access stable, long term pricing.
Royal Decree 17/2021 set out the initial measures to cap electricity costs and required the government to arrange the first auctions by December 31, 2021. That deadline passed without action, and auctions have not taken place. Enforcement moved ahead without the legislative steps needed to implement them.
As a result, companies compelled to sell under the plan and those benefiting from it began to view the legislature as closed to new auction activity. This created relief among some and frustration among others.
Small energy suppliers and large industrial users, who could buy electricity at fixed, affordable rates, continue to seek this opportunity. The Ministry of Ecological Transition, led by Vice President Teresa Ribera, has expressed concern about the mismatch between policy promises and actual implementation. Independent electricity distributors and major industrial groups press governments to deliver on the commitment.
The Association of Independent Energy Marketers ACIE, gathering around twenty companies not tied to large groups such as TotalEnergies, BP, Cepsa, Fenie, or Factorenergia, and the Large Energy Consumption Companies Association AEGE, representing large industrial groups including ArcelorMittal, Acerinox, Sidenor, Ferroatlántica, and Tubos Reunidos, have repeatedly urged the government to proceed with auctions. Reports from industry sources indicate both groups have voiced dissatisfaction with persistent silence from authorities. The Iberian press notes the push for auctions and the expectation from independent traders that these auctions would allow customers to access electricity from large producers at reasonable prices, reducing exposure to wholesale market volatility.
Insurance that price control affects big power players
The major electricity firms, which would be required to sell portions of their output, spent the past year and a half openly resisting the measure and warning that the policy cannot operate if it forces the consolidation of sales through a few channels. They argue that auctions would move electricity away from promised buyers and shift supply among customers.
The government has been cautious about formally rejecting the mandatory auction plan, opting instead to pause the initiative on the grounds that implementing it could drive certain utilities to terminate long-standing contracts. The Ministry of Ecological Transition, charged with coordinating a possible tender, has not definitively dismissed the plan but acknowledges that it would be difficult to implement and favors prudence.
Electricity supply agreements often include clauses that allow changes in regulatory conditions to affect profitability. Iberdrola, for one, includes terms that could terminate contracts without compensation if the government pushes auctions and the company must participate under new rules.
The National Markets and Competition Commission CNMC has already delivered the report establishing the mandatory reserve price, the floor at which companies can sell electricity without incurring losses, yet progress on other preparatory steps for launching the bidding remains stalled.
Participating in these tenders is not optional for large utilities; it is viewed as a necessity. The initial plan, originally slated for 2021, anticipated auctions covering about 15,830 gigawatt hours of energy, roughly 25 percent of annual production at the time. The distribution of required participation among companies would have been based on generation quotas: Iberdrola over 7,300 GWh, Endesa about 6,700 GWh, Iberdrola a separate figure cited earlier as 1,400 GWh, and EDP around 360 GWh. These figures illustrate how the plan aimed to spread the auctioned volume across major producers, should it move forward. Sources from ACIE and AEGE report ongoing calls for the government to proceed with auctions and to formalize the program with clear deadlines for all stakeholders. This narrative reflects continuing pressure from industry groups to reduce exposure to market volatility through long-term, stable pricing arrangements.