Following five consecutive months of dramatically slumped electricity wholesale prices from April to August this year, Spain's two biggest utilities and leading wind operators, Endesa and Iberdrola, have accused each other of gaming the electricity pool market. Regulator Comisión Nacional de Energía (CNE) has opened a formal investigation. Meanwhile, the low prices are affecting wind earnings. Following improved market incentives established in March's new renewables tariff regulation, many wind operators have solicited and received rights to sell wind production on the daily pool market. Few operators have yet exercised these rights, possibly deterred by reduced pool earnings. Instead, wind producers are sticking to an alternative protected tariff option. Failure to take the market plunge comes despite a report by wind association Plataforma Eólica Empresarial (PEE) indicating that earnings on the market were at least 8.5% higher than the protected tariff. PEE's report, however, was based on market trends and an estimated average pool price of EUR 31/MWh. Now, the freak summer dip has seen pool prices fall by an average of 15-20% compared to the same period last year. The cause, according to Iberdrola, is that Endesa is under pricing power sales from its coal fired plants in order to stay within the earnings limit for receiving stranded cost compensation. Endesa is the main beneficiary of the stranded cost allocation following liberalisation of Spain's electricity sector in 1997. Endesa has retaliated, accusing Iberdrola of under pricing its hydroelectric production for the same reason. Both utilities, as major wind operators, are members of PEE and the association has called for a meeting with CNE to monitor the investigation.
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