Unions warn against price cuts

Spain's main trade unions backed by a top environmental think tank warned last month that a deal to cut power prices by 8% could have a disastrous effect on the new energy sector, including the country's budding wind industry. The communist Workers Commissions (CCOO), the socialist General Union of Workers (UGT) and AEDENAT, one of the country's foremost environmental organisations, say that price cuts now being contemplated in ongoing negotiations for market liberalisation could wreck years of progress in the wind power sector. According to the three organisations, the deal would force renewable energy generators to apply the same prices as conventional power producers. This would signal an end to the profit margins that the subsidised price per kilowatt made possible. Subsidised prices, they add, should be seen as compensation for renewable energy's lack of impact on the environment.

The warning came as both government and power moguls initially agreed last month to slash power prices to help free up the market and encourage greater competitiveness in the sector by 1998. The 8% cut contemplated would be staggered over the years up until 2001: 3% by 1997, 2% by 1998 and 1% every year after that until 2001.

According to energy secretary Nemesio Fernandez Cuesta, small and medium sized companies would benefit most from the cuts, enjoying 15% reductions by 2001. Private and big power consumers looked to gain considerably less, although at this stage analysts could not safely predict what kind of margins would be involved or how renewables would fare.

The same grouping of unions and environmentalists are also demanding that Spanish electrical giant, Endesa, honour a pact it signed in 1992 to promote the use of wind power and connect at least 750 MW of wind to the grid by the year 2000. In the view of the three organisations, Endesa is committed to its self-set target and should not be forced into any other deal that might endanger the development of wind power in Spain. The unions and AEDENAT feel that the current negotiations could force ENDESA to rethink its long term wind power plans.