Today the National Court has started the first trial against an electricity company for manipulating the market price by raising the price of electricity, passing a large part of the increase on to consumers. Four Iberdrola executives, as well as the company as a legal entity, have sat in the dock today to face a sentence of two years in prison and a fine of 85 million euros.
In the first session, the court heard the interrogation of two defendants: Ángel Chiarri, director of energy management, and Gregorio Relaño, head of optimization, resource management and trading at Iberdrola.
Both have answered the questions of the Anti-Corruption Lieutenant Prosecutor, Antonio Romeral, lawyers of the accusations, among them the consumer association Facua, and of the defenses, among which was the former State lawyer head of the Criminal area until this August, Rosa María Seoane, and who has now been signed by the González Franco law firm, which was representing the company.
The first two defendants have maintained an identical line of defense in which they deny any accusation of market price manipulation.
The main accusation in the matter is that Iberdrola allegedly intentionally cut the production of its reservoirs in the weeks prior to the November 2013 auction so that other energy sources that are more expensive, such as coal or combined plants, could be connected.
This contributed to an increase in the price of electricity by 26.5% during the first quarter of 2014, which would have resulted in a 10% increase in the pockets of small consumers, as concluded by the experts of the National Commission of Markets and Competition (CNMC) appointed by the judge who investigated the case in the National Court, Ismael Moreno.
Both Chiarri and Relaño have defended that the price offered is decided by a machine and at no time did they give or receive the order to increase the price of hydroelectric energy from their Duero, Sil and Tajo hydraulic plants in order to remain out of the auction and thus the other, more expensive type of energy was consumed.
Both the Prosecutor's Office and the CNMC - which has already imposed a fine of 25 million euros for these events, pending execution until the criminal process is resolved - believe that Iberdrola imposed a price above the daily market price that prevented matching the operations, despite the increase in electricity prices in the spot market in those days, which placed it at an optimal opportunity cost.
According to the accusations, this situation determined the withdrawal of programming from the aforementioned plants, that is, they stopped producing energy. The two defendants, on the other hand, have defended that Iberdrola had a “net buying position”, which meant that in addition to selling energy it bought it, so if the auction price rose, it would also have a negative impact on the company.
“We have never received any instructions,” said Chiarri, who in turn insisted that “I did not give the order to raise prices at all.”
Regarding the tension that existed at that time between the company and the government due to the electricity increase, the two defendants have denied having any relationship with the interaction between the company and the executive at the time, with José Manuel Soria as Minister of Industry.
Both have pointed out that the price increase at that time was also carried out by other companies and was due to the 40-day season of extreme drought, which finally stopped due to a cyclogenesis that generated significant storms and encouraged the consumption of renewable energy.
Furthermore, they have wanted to clarify excessively, to the point of annoying the president of the court, that at all times Iberdrola offered all of its energy, but that not all of it is sold at auction, as happens with other competitors; Therefore, it is not that they removed it from the OMIE electricity market, but rather that its sale was not necessary.
“In every month, every day there are undispatched offers. For this not to happen, the system would have to be at its limit, all resources would be needed and then there would be a risk of supply problems. There is always undispatched supply,” Relaño detailed.
The Prosecutor's Office's calculations are that with this operation Iberdrola caused a loss of 107 million euros, of which 10.5 million were passed on to the marketers, and the rest to consumers.
