Since January 1, 2003, all consumers of electricity in Spain have been able to choose their distributor. That was the start of a long process of liberalisation of the energy sector, not yet complete, which in theory should have seen cheaper electricity bills. The hope was that competition between companies, as happened in the telephone market, would lead to better offers to win customers. A decade on, not only has this not happened, but the bills have skyrocketed. According to a study by the Organisation of Consumers and Users (OCU), electricity bills have gone up by an average of 60 per cent since 2007. And Eurostat statistics show that Spaniards pay the third-highest electricity bills in Europe.

Consumers are starting to react. Just yesterday the OCU launched an initiative to buy electricity collectively to reduce the energy bills. Its proposal, which has several precedents in Europe, is to create a large group of consumers to buy power wholesale and negotiate the price directly with the distributors. In theory, this should see bills reduced: the more energy is purchased, in bulk as it were, the cheaper the price.

Until October 14, any person, whether or not member of the OCU, can join the purchasing group on the web page. Two days after that the organisation will hold an auction, which all the distributors who want to supply power to this entire mass of customers can take part in, and the one that offers the lowest price will win. The name of the winning company will then be announced to the consumers on November 4; there may be two winners, if it is also decided to accept an offer for electricity bundled with gas, and each customer will be given details of the savings to be made. If the offer is acceptable, the customer will formally accept it and the distributor will be able to close the contract.

Consumer initiatives across Europe

Several European consumers associations have already launched similar initiatives, some with great success. In the Netherlands, where it was launched last year by Consumentenbod, the plan was signed up to by 52,000 consumers, each of whom managed to save on average €277 a year. In Belgium, promoted by [Test-Achats] (http://www.test-achats.be/), 152,000 people joined up and got savings of €130 off the electricity bill and €435 off the gas. In the United Kingdom, the organization Which? succeeded in negotiating average savings of €258 for 285,000 people, while in Portugal DECO won discounts ranging from €25 to €80 for nearly 600,000 customers.

Antonio Arranz, head technician in energy matters at OCU, hesitates to guess at the potential savings in Spain. “It’ll depend on the number of people who sign up for the initiative and the profile of each one,” he says. He does add, however, that most of those who sign on will get something better than what they have now. In fact, according to his calculations, “there are customers in the free market that think they have a good deal going, and they’re paying 25 per cent more than the regulated rate.”

He now hopes the companies will respond positively and show a willingness to participate in the auction and offer attractive rates. Endesa, one of the five big companies that dominate the Spanish market, attended the auction in Portugal and won it, but has yet to decide if it will show up at the OCU auction.

The precedents in Germany, England and most recently in Portugal have encouraged us to try to buck the system

At the National Association for Savings and Energy Efficiency (ANAE), created to bring together energy consumers and trim the bills for water and light, efforts have been underway for more than half a year to put together a similar proposal. “The precedents in Germany, England and most recently in Portugal have encouraged us to try to buck the system. We already have the go-ahead of the National Energy Commission, and we’re waiting to see what the industry says”, explains Francisco Valverde, its spokesman. There’s no launch date yet.

The problem with Spain's electrical system

“These are proposals that can shift a few euros around, but they don’t get to the heart of the matter. I don’t see much happening with it, because the problem of the Spanish electrical system is not with the distributors, but with the very design of the system,” says Jorge Fabra, President of Economists Against the Crisis, former President of Red Eléctrica de España and former advisor to Spain’s National Energy Commission.

According to Fabra, the Spanish system is a Tower of Babel that is difficult to understand and that produces major errors of diagnosis. “And the main problem, I stress, is not that there is or there isn’t competition among the distributors. It’s that the system does not distinguish between energy sources: power from hydroelectric dams and nuclear plants is cheaper than from coal and natural gas, but they’re all sold at the same price. That means some people take away far more money than they should”, he explains. “But none of reforms undertaken so far by the various governments have been able to tackle this issue. There are many business interests caught up in it,” he goes on.

Distributor companies attribute the lack of attractive offers to the low margins they work with, because the fixed part of the bill, which is set by the government, is the same for everyone and they can only make savings in the last phase of the process: administrative, staff and management costs.

Green energy cooperatives – distributors that have entered the market dealing with consumers that are committed to renewables – also want to change the rules of the game. This summer they took a big step forward. Recognising that the government wants to tax electricity generated at home by solar panels or mini-windmills – and also consumed in the home – they are calling for civil disobedience to defend their model. El País has counted up half a dozen of these Green distributors. According to their representatives, they are growing fast and offer good prices.