Regulating the Electricity Sector in Spain

26 December 2018
Oscar Arnedillo

In the December 2018 issue of ICE Magazine, NERA Managing Director Oscar Arnedillo analyzes the Spanish electricity market and suggests regulatory reforms.

In his article, Mr. Arnedillo explains that the objective of electricity sector regulation must be to facilitate its efficient operation in order to maximize social welfare. This means:

  • In the wholesale market, the regulator must eliminate any distortions that affect prices and the decisions of agents.
  • In network activities, the regulator must design a remuneration mechanism that offers companies a reasonable expectation of recovering costs incurred prudently.
  • In the retail market, the regulator must design access tariffs that reflect the marginal costs of supply, it must reduce the scope of application of regulated tariffs, and it must provide information to consumers.