Spain’s wholesale electricity market was liberalized in 1998. Its retail market was liberalized progressively, with full liberalization being achieved in January 2003. The Spanish electricity market was due to proceed to a new stage on 20 April, with the integration with the Portuguese electricity system, but technical and political reasons eventually led to the delay of such an integration. This is a long way from where the system stood 10 years ago, when competition was a distant concept and the remuneration of electricity companies was determined through the use of regulated ‘standard costs.’

In an article titled “A New Reign in Spain” published in the May 2004 issue of Power Economics, NERA Director Oscar Arnedillo explains that even though substantial progress has been made, much remains to be done for Spanish consumers to get the full benefits of liberalization and the reform of regulation, in a system where the majority of small electricity consumers are still supplied under a regulated full-service tariff. The rise to power of the socialist government in March 2004 opens the door to much-needed reform, primarily in regulation.