Two Iberdrola executives, including one who has already retired, denied the accusation during a Tuesday session at the National Court. The claim concerns a scheme allegedly developed by the company in 2013 to raise the price of the electricity it sold. The witnesses asserted that Iberdrola does not rely on any explicit slogan or strategy, and that the market price for energy is determined automatically by a system that processes available data.
In the proceedings, Iberdrola Generación and four executives face trial over the supposed 2013 scheme to push up energy prices and harm consumers. The defendants named include Angel Chiarri, who serves as Energy Management Director, and Gregorio Relaño, who at the time managed Optimization, Resource Management and Trading. The court is examining whether this system was designed to increase prices beyond what would result from the natural balance of supply and demand.
On the first day of the case, attention focused on how Iberdrola set the price for the energy it offered and why certain energy sources, such as hydroelectric power, were exempted from the offer. Hydropower, cheaper to produce, was implicated in the claimed price increases that allegedly affected consumer bills.
Chiarri, attempting to explain the system with analogies, offered a succinct description that surprised both the judge and the prosecutor. He said that in Iberdrola the energy price was determined by a “machine” — a data organizing computer tool that ingests multiple variables, including rainfall forecasts, wind patterns, and even geopolitical factors that could impact gas import prices.
Both he and Relaño noted that planning meetings were held every Thursday to decide the proposal to be placed on the market, which would then be distributed through the company’s organizational chart and assembled into what was called the “weekly plan.”
Chiarri added that the plan was created by feeding variables into the system, which is why the price was described as generated automatically. He emphasized that the process includes forecasted production and some degree of human oversight, calling it an action protocol rather than a rigid automation.
Nevertheless, Chiarri stressed that the most important point is that the price was marked automatically by Iberdrola, while insisting that the company could not manipulate the system and that there were days when the company incurred losses on issues related to the case.
“Designed” system
According to the prosecutor’s indictment, the objective was clear: to raise electricity prices and to harm consumers. Iberdrola Generación allegedly designed a system that would push energy prices higher than what supply and demand would ordinarily justify, and this system was put into operation with the intention of extracting higher payments from the market [Attribution: Prosecutor’s indictment].
The indictment identifies Iberdrola’s leadership as including Ángel Chiarri, director of Energy Management; Gregorio Relaño, responsible for Optimization, Resource Management and Trading; José Luis Rapún, Asset Management; and Javier Paradinas, in Short-Term Markets and Global Production.
According to the Public Ministry, Iberdrola Generación disrupted the merit order of power plants in the dispatch process, resulting in reduced output from the Duero, Sil and Tajo hydropower facilities. As a consequence, purchases were linked to more expensive energy generated by combined-cycle plants, with prices reaching around 80 to 90 euros per megawatt-hour, compared to 45 to 55 euros from hydro facilities on average [Attribution: Public Ministry].
The prosecution seeks a sentence of two years’ imprisonment for the four executives, coupled with a special disqualification from employment in producing or selling electricity and a €400 daily fine for a year, along with penalties for non-payment that would suspend liberty for each day unpaid in proportion to wages earned [Attribution: Prosecutor’s request].
The Public Ministry also requests a substantial financial penalty, amounting to €84,891,272, which would be four times the profits, and the seizure of profits obtained from the activities in question. In related actions, it is recalled that in November 2015 the National Markets and Competition Commission (CNMC) fined Iberdrola Generación €25 million for actions seen as price manipulation in the Duero, Sil and Tajo hydroelectric plants between late 2013 and December 2013 [Attribution: CNMC decision].