Iberdrola and four directors sit on the bench of the Court for inflating the price of electricity

Iberdrola Generación and four company directors will sit next Tuesday on the bench of the National Court in the first criminal case against an electricity company for allegedly manipulating the price of electricity. The company faces a fine of 84.9 million euros for inflating the cost of its hydropower between November 30 and December 23, 2013 to cause other more expensive sources of production, such as combined cycles, to have to connect to the network. As a consequence, the price of electricity shot up by up to 126%.

The oral hearing is expected to last until November. In addition to the fine, the anti-corruption prosecutor in charge of the case, Antonio Romeral, requests two years in prison for the four managers who would have intervened in the alleged adulteration of the price for a crime against consumers and the market.. This is the director of Energy Management at Iberdrola Generación, ACT; the person responsible for Optimization, Resource Management and Trading, GRC; the head of Asset Management, JLRJ, and the head of Short-Term Market Management and Global Generation, JPZ.

The experts from the National Markets and Competition Commission (CNMC) concluded during the investigation phase that, with the adulteration of the pricing mechanism, Iberdrola would have achieved extraordinary profits of 21.2 million euros and the suppliers and citizens lost 107.3 million. In addition to the Public Ministry, the marketing companies Geoatlander SL, Axpo Iberia SL and Belegi Invest SL, as well as the consumer association Facua, which exercises the popular accusation, are accused..

Witnesses such as the former Minister of Industry, Energy and Tourism José Manuel Soria and the former Secretary of State for Energy Alberto Nadal, top political officials of the electricity sector in the moment of the events. Both already declared during the investigation phase.

During his appearance, Soria recalled that the ministry's technicians detected that Iberdrola “did not generate the corresponding hydraulic electrical energy” and was convinced that there was “manipulation” of the system.. According to the former PP minister, his Government's relations with the Spanish multinational were not exactly going through a good moment in those weeks, after the Ministry of Finance refused to include an item of 3.6 billion in the general State budgets for 2014. to reduce the tariff deficit. Soria linked the closure of the reservoirs to these tensions.

Nadal had more friction with the electricity companies during his time at the Secretary of State for Energy, but, when it was his turn to testify in this procedure, he ruled out that Iberdrola had committed any type of irregularity and downplayed the importance of the episode.. However, the uncontrolled escalation of prices led the Government of Mariano Rajoy to cancel the auction that was to set the prices that consumers would pay during the first quarter of 2014 to prevent them from rising by 10.5%..

Reports prepared by the Central Operational Unit (UCO) of the Civil Guard after the search of the Iberdrola headquarters in Madrid and Bilbao in 2017 and that are included in the case summary reveal that the company allegedly established the price of its hydraulic production in informal meetings, through verbal orders, with unknown criteria and without leaving a written record of those decision-making processes.

The agents verified, for example, that the multinational awarded a much higher price to its water reserves than in previous years, despite the fact that, in 2013, the state of its reservoirs was more favorable.. They also confirmed that the company had planned in internal documents to contribute more hydraulic energy to the network than it finally delivered on the days under suspicion..

The Public Ministry concluded the investigation phase by pointing out that, “to achieve a higher price in the electricity market (…), [Iberdrola] increased, without legitimate cause to justify it, the price in the electricity offers corresponding to its Duero, Sil and Tajo hydraulic plants, at a level above the daily market price that prevented the operations from being matched.”. “This situation determined the withdrawal of programming from the aforementioned plants, that is, they stopped producing energy,” the prosecutor noted in his writing.. “The consequence of the artifice concocted and carried out by the defendants was the increase in the price of electrical energy by at least 7.156 euros/MWh, which caused damage to demand of at least 107.3 million euros” .

For its part, Iberdrola has always maintained that, during the weeks investigated, it had a buying position in the market and that the increase in prices caused it losses, so it had no reason to contribute to the increase in costs. Likewise, it points out that the evolution of its hydraulic supply responded to rational and transparent criteria and that the intervention of other factors in the rate increase has been undervalued.