Rising electricity costs have created a strong push in the market, sending shockwaves through smaller energy companies that lack the financial heft to weather the storm. Volatility and price chaos have strained market confidence, and some independent marketers have folded because they could not secure heavy collateral or scale like the industry giants.
In 2021, twenty-two small electricity providers had already shut their doors as market tensions intensified since the summer. The situation worsened the following year, with price increases amplified by the war’s impact. As a result, thirty-five marketers left the official register, and in 2023 the National Markets and Competition Commission, CNMC, reported that twelve more entities disappeared from the sector. Today, there are 501 trading companies actively operating in the Spanish market, according to CNMC data and the regulator’s published figures for the period.
When a retailer goes bankrupt, affected customers can temporarily fall back on a last-ditch contract offered by one of the major electricity groups—Iberdrola, Endesa, Naturgy, Repsol, and TotalEnergies. This arrangement provides the regulated tariff to prevent a supply disruption while a new supplier takes over or a market solution is found.
The regulated tariff, known as the voluntary price for small consumers (PVPC), is available to households and some small- to medium-sized enterprises that have contracted power below 10 kilowatts. Larger users who depend on higher power and consumption typically do not qualify for PVPC and often find themselves outside the protected rate. These larger customers, including many medium to large companies and public facilities, usually operate under different market arrangements that match their higher energy needs.
Millionaire cost overrun
Large consumers find themselves facing an extra charge on their bills during the transition when a trading company disappears and a switch to another supplier is in progress. The surge in company closures, alongside sharply rising market prices driven by global energy dynamics, pushed the amount collected under this mechanism to an almost eightfold increase during the prior year. Market observers note that these developments placed a significant burden on the overall system and contributed to higher bills for many households and businesses alike.
In the prior year, the extra cost borne by large customers affected by the disappearance of trading companies exceeded expectations. Officials put the figure at 63 million euros, nearly nine times higher than the year before, a trend highlighted in CNMC’s interim report on electrical system placements for the year 2022. These numbers reflect the broader impact of market upheaval and the ripple effects throughout the sector.
The registered total also rose well beyond the original forecasts. Government projections and CNMC estimates had placed the annual figure at about 9.48 million, but actual outcomes reached a multiple higher due to exceptional circumstances, rapid price shifts, and a larger number of customers affected than initially anticipated. The market dynamics in play at the time explain much of this divergence, illustrating how regulation and industry structure interact under stress.
These developments have sparked debates about the balance between deregulated competition and consumer protection, with policymakers examining how to cushion large users from volatile costs while preserving market incentives for suppliers. The CNMC and the administration continue to monitor the evolution of the sector and to explore potential reforms that could stabilize prices without dampening competition.
20% surcharge on receipt
Not all customers face the same price path. Those who are not eligible for PVPC or who rely on regulated pricing after a supplier exit do not receive the same baseline rate as others. Legislation mandates an additional 20 percent surcharge on all regulated items within their electricity bill for these users, reflecting the framework that redistributes costs across the system.
When customers pay this extra 20 percent, the amount is transferred to their new or current regulated retailer. The marketer remits the funds to the distribution company, the network operator that delivers power to homes and businesses. The distributor then accounts for these sums as system revenue used to fund the regulated costs borne by all electricity customers, ensuring the continued operation of the grid during periods of market adjustment.
In practice, this surcharge acts as a transitional mechanism. It helps finance the costs incurred by the regulated sector as the market consolidates and as customers move between suppliers after failures. Market observers argue that while the surcharge supports system stability, it also underscores the ongoing tension between price volatility, supplier performance, and consumer bill levels. The dialogue among regulators, industry participants, and consumer groups continues as reforms are explored to improve resilience and clarity for all market participants.