Spain is seeing electricity prices rise three times the EU average, according to Eurostat data released last week. The energy crisis was exacerbated by Russia’s invasion of Ukraine and this was particularly true for Spain, where prices soared 9.8% in the first month of Putin’s war against to 2021.
Prices are significantly higher in Spain than the EU average of 7.8%, or compared to Germany at 7.6%, Italy at 6.8% or France at 5.1 %.
This contrast is mainly the result of soaring electricity prices.
Among EU countries, only Lithuania (15.6%), Estonia (14.8%), the Czech Republic (11.9%), the Netherlands (11.7%), Latvia (11.5%), Bulgaria (10.5%) and Poland (10.2%) recorded higher price increases than Spain.
The Spanish newspaper 20minutos claims that the reason why Spain is particularly affected by the war in Ukraine, despite being so geographically remote and lacking many direct links with any of the countries involved , is due to the specific functioning of the electricity market in Spain.
According to Eurostat data, 42% of Spain’s 9.8% inflation was due to electricity – a figure significantly higher than the average European country’s figure of 28%.
For countries like France, electricity is only responsible for 14.7% of inflation.
At the start of the invasion, electricity prices in European wholesale markets reached record highs due to the sudden rise in gas prices.
For Spain, wholesale electricity prices averaged €285 (£240) per megawatt hour, making last month its most expensive on record.
This means that Spain’s electricity bill has climbed 107.8% compared to the same month in 2021. Within the EU, the only country to reach more than this was the Netherlands at 181, 9%.
This huge price spike has caused electricity price inflation in Spain to reach three times the EU average.
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However, the remaining 40% of Spanish households have their bills contracted on the regulated market, where consumers’ monthly bills are directly linked to wholesale energy prices.
For these consumers, an increase in wholesale electricity prices is automatically passed on to them.
In addition, the Spanish Institute of Statistics only takes into account electricity bills on the regulated market to calculate the increase or decrease in household electricity bills.
This makes their measurement of electricity prices inaccurate and likely much higher than the actual amount.
For example, CaixaBank Research estimated in a study published in January in which it analyzed two million electricity bills, that the average CPI for 2021 could have closed at 2.2% – and not at 3.1% as it has been reported.
Additional reporting by Maria Ortega.