Red Electrica de Espana SA: Instrument of regulation and liberalization of the Spanish electricity market (1944-2004)

To understand the regulation system of the Spanish electricity market it is first necessary to understand on the one hand the system of tariffs and prices, and on the other the organization of the market for high voltage distribution. This article is concerned with this second aspect and traces its history from 1944, this is because before that date it was not possible to speak of a truly national market, but rather only of regional monopolies. In the 1940s, with Franco's new political regime, and the development of the Spanish electricity sector, it became necessary to completely rethink business strategies in relation to competition and cooperation, as well as the regulatory function of the state. In the 1950s, the main feature of the sector was the system of business self-regulation permitted by the state. Throughout the remaining years of Franco's government state intervention was particularly focussed on the subject of tariffs, but with the onset of democracy the state was to involve itself in the transmission network as well. A debate began as to whether it should be run by a private or public operator. In this dispute were ranged, on the one hand, the economic policy concepts of the major parties (PSOE and PP), and against them the strategic interests of the companies. Although the high voltage transmission network was nationalized by the state in the mid-1980s, establishing a 'traditional' model of regulation, the 1990s saw the triumph of a market-based regulation, strongly influenced by the dominant ideas in the European Union, which has converted Red Electrica into a private company. Currently the TSO (Transmission System Operators) model has been extended to Portugal and has entered into competition-cooperation with the other models of the European electricity market. (C) 2009 Elsevier Ltd. All rights reserved.