Month after month, with each electricity bill, all customers pay off a colossal debt accumulated by the electrical system during years. A part of each bill is used to pay a large mortgage – the result of imbalances between costs and income of the system – that customers originally had with the electricity companies and that is now in the hands of banks and investment funds. A debt that is going to be paid for more than two decades and that will be settled in 2028 after being charged to electricity bills more than 40,000 million euros.
This mortgage is a consequence of the fact that for years what consumers paid with their electricity bills was not enough to cover all recognized costs of the electrical system. The huge hole, known as the tariff deficit, grew uncontrollably until reaching a peak of 28,700 million euros in 2013. It was the result of 14 consecutive years of deficits, until the harsh cuts of the electricity reform of the first Government of Mariano Rajoy caused the electrical system to start accumulating surpluses as of 2014.
This year the electricity bill will include payments for almost 2,397 million euros to cover this debt, as stated in the ministerial order with which the Government has established the electricity charges for 2022. The charges included in the receipt are used to finance costs derived from the energy policy, such as remuneration for renewables, the extra cost of the extrapeninsular territories or, also, that accumulated debt.
Since 2006, electricity customers have paid 28,973 million euros in their bills just to cover the accumulated debt due to the gap between income and system costs. And until the debt is fully paid, they will still pay at least another 12,171 million more until 2028, according to the latest estimates by the National Commission for Markets and Competition (CNMC). In total, the electricity bill will have loaded with more than 41,144 million euros for a little over two decades to plug the electrical hole.
financial broken
The mismatches between costs and income of the electrical system came from very far away, but it was in 2000 when the government of Jose Maria Aznar allowed that the electricity companies were not paid all that the supply cost, that this gap be converted into debt and, with it, open a financial hole to be able to clamp down on inflation and meet the Maastricht criteria for entering the euro. The hole ended up shooting up for years of uncontrolled distribution of premiums to the new renewables with the governments of Jose Luis Rodriguez Zapatero.
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At first, consumers owed that amount to the electricity companies themselves, which were the ones that for years assumed the difference in their balances and financed the gap between recognized revenues and costs. But that broken billionaire was being securitized and placed in the financial markets, and the electricity companies were ceding the debt collection rights to investment funds and banks.
The vast majority of the debt was transferred through placements in the market made by the Electricity System Deficit Securitization Fund (FADE), but not only. There were also other types of specific placements: to cover the 2005 deficit, the 2007 settlement deficit, the 2013 deficit, the ex-ante deficit… And although it was initially planned to finish paying in 2026, the making of new issues for giving liquidity to FADE and other adjustments have been extended for the time being by two more years.