In response to a nationwide blackout that occurred on April 28, independent electricity providers in Spain are contemplating the introduction of surcharges to their customers.

This decision comes after the nation experienced its most significant electrical incident in history, which prompted a reassessment of operational safety protocols within the electricity grid.

According to reports from several electricity companies, at least one provider has already begun implementing an 'anti-blackout fee' in contracts signed after the blackout.

Others are considering similar actions due to the substantial impact the blackout has had on their financial performance, as the increased operational safety measures have led to rising costs.

Red Eléctrica, the operator of the national electricity grid, has altered its operational protocols in the wake of the blackout, emphasizing enhanced security.

This revised strategy has necessitated the use of additional backup generation methods, including hydraulic, combined cycle gas, and nuclear technologies.

These adjustments are categorized within the technical adjustment markets, raising operational costs dramatically for electricity providers.

Post-blackout operational costs for electricity companies have reportedly doubled, creating a financial strain as these firms attempt to absorb costs that cannot be passed on to consumers immediately.

This looming financial challenge has been communicated to both Red Eléctrica and the Spanish government through letters from affected electricity providers and ACIE, a trade association representing many independent firms.

However, there has yet to be a response to these communications.

During a recent Market Agents Committee meeting held at Red Eléctrica's headquarters, several companies expressed concerns about the duration of the increased operational costs.

Concha Sánchez, the director of Red Eléctrica, confirmed that the enhanced safety measures would remain in place for the foreseeable future.

As uncertainty persists regarding the costs associated with adjustment markets, many electricity providers are left with little choice but to increase their prices.

While adjustments in the fine print of contracts for individual consumers may be challenging, companies are opting to raise megawatt prices during contract renewals.

In the business-to-business (B2B) sector, some providers are disclosing in contracts a cost of around 12 euros per MWh for adjustment markets, stating that any excess will be billed at the end of the month.

Notably, this cost surged to approximately 25 euros in May and has at times exceeded 30 euros per MWh.

The independent electricity suppliers are concerned that, after facing severe repercussions from the energy crisis in 2022 and 2023—which resulted in bankruptcies and customer losses—they are once again suffering from the fallout of the blackout.

They warn that if the enhanced operational measures continue for an extended period, the additional costs could amount to several billion euros.

Nearly 10 million customers on the regulated price tariff, PVPC, have already seen their bills increase by at least four euros due to these costs, which are expected to affect an additional 20 million electricity consumers.

The extra costs associated with these enhanced security measures—described metaphorically as a 'broad-spectrum antibiotic' by the Minister for Ecological Transition—are anticipated to benefit traditional generation owners, specifically larger energy companies such as Iberdrola, Endesa, and Naturgy.

While Repsol, a significant player in the electricity market, initially considered implementing a similar surcharge, company representatives have since clarified that they will not impose additional fees on their customers, focusing instead on expanding their customer base amidst increasing revenues from their gas and hydraulic generation assets.

Electricity providers are also expressing frustrations over a lack of transparency in secondary markets, particularly as traditional technologies take a more prominent role.

They are advocating for greater visibility into the costs they are expected to manage.

Minister Sara Aagesen has downplayed the significance of the additional costs incurred from the increased technical restrictions, stating that the overall bills this May remain lower compared to 85% of months since 2019, despite the pandemic and energy crisis.

She noted that enhanced operational measures represent only 35% of the costs in the adjustment market, indicating that not all price increases can be attributed to the new safety protocols.

In recent public consultations, providers have suggested that one solution to manage growing adjustment service costs may involve reallocating these expenses to regulated network charges rather than energy rates, given their dependence on system operator management.

This proposal has been forwarded to the CNMC, Spain's national markets and competition authority, as part of ongoing discussions to improve regulatory frameworks.