Snow and sub-zero temperatures have engulfed much of Europe in the past weeks. Yet, affordable electricity and, therefore, heating is not equally accessible across the continent. Rafael Silva Álvarez knows this first-hand: this winter, he worked in a call centre for a Spanish energy company, instructed to “sell [rates] as expensive as possible”. For E&M, he recounts this experience and what it means for the Spanish electricity sector.
I am a humanitarian worker. Or, at least, I was from 2014 to 2020. One year ago, I was coming back to Spain, my home country, after two years working for an NGO in Nicaragua. The idea was to spend a few weeks with my family before moving on to the next job. It was February 2020. You all know what happened after… Lockdowns, travel restrictions and a lot of uncertainty. I kept myself busy working random jobs, while interviewing for positions overseas. But moving on with the next job proved to be more difficult this time. Turns out it is quite complicated to get a visa while the whole world is hit by a pandemic.
Today, exactly twelve months after landing in Spain, I find myself working in a call centre where I sell electricity supplies by phone for the largest oil company in the country. Quite a change compared to my previous six years working in the non-profit sector.
I started this new position back in November, shortly after a job offer in South Africa fell through due to new travel restrictions implemented by the South-African government. At that point, I needed money to pay rent and a friend suggested to try my luck in the local call centre. It seemed easy enough and I decided to give it a try. After a one-week training period, they offered me the job and I decided to accept, telling myself it would not be for long.
Those of you who have experienced the working dynamics of a call centre already know how a regular day in the office unfolds. To me, the word that best describes the dynamic is sterile. After a couple of weeks, it stops being challenging and it feels like you are just going through the same selling speech over and over. However, call centres can give you access to useful information too. In my case, my new job was about to shed light on a reality I was completely unaware of: the rotten pricing system of the electricity sector in Spain.
Electricity is something most people in western countries give for granted. It is available to most of us and we barely think about where it comes from or how its price is determined. I have spent most of my adult life working overseas, and very often my accommodation and bills were covered by the organizations I was working for. Therefore, I never put too much thought into this, but I expected the regular Spanish citizen to be better informed. Very often, people do not know which company supplies their electricity or at what price.
How much do you pay for electricity?
That is a question not a single person was able to answer me after hundreds of calls. Often people would tell me the bills are too complex, and they just check the final price (which also includes taxes, rental of equipment, maintenance, etc.).If it seems reasonable then they simply pay and forget about it until the next month. But what is reasonable?
In Spain, until 1997, the electricity market was regulated by the government. The main player in the sector was Endesa, the public electricity company, and there were a few other private companies supplying energy in the country. The price consumers paid, however, was determined by the government. Prices would be set based on costs of generating and supplying the energy, plus adding a reasonable profit margin for the companies above mentioned.
That changed after the market was liberalized in 1997. Endesa was privatized and together with four other companies (Iberdrola, Naturgy, Repsol, EDP), they now control over 90% of the market. Liberalization was seen as a way to improve market conditions, to create incentives for companies to compete, and ultimately to give freedom to consumers to choose the best offer available in the market. In reality, the Spanish energy sector became a flagrant case of oligopoly.
As days went by in the call centre, I understood how the system is. The price of the kWh in the liberalized market ranges from 0.07 to 0.20 cents. That is a massive difference for a service that remains the same regardless of the price and the provider. Electricity is electricity no matter what. The rate consumers pay often depends on people like me, selling them supplies over the phone. As companies are in for the profit, you can already guess what the priority is:
Try to sell as expensive as possible, only going for cheaper rates if the clients know how much they are paying. If they pay 0.15, then offer 0.14…
I have talked to many people on the phone who complained about their bills. They say they pay more than their relatives, friends or neighbours. Sometimes this is due to higher consumption. Very often it is due to a difference in the price they pay per kWh. If you and I purchase an equal service/product from the same company… Why do we pay different prices?
Based on my conversations over the phone I can tell most people whose energy is supplied by these big companies are paying abusive prices. This happens because a) there is not enough information available and b) there is no real competition between the big eléctricas. If you remember your economy class in high school, transparency and competition are basic elements for the correct functioning of markets, and neither exist in the Spanish context.
The access to energy is a right protected under the Spanish constitution. However, the cost of electricity in the country has skyrocketed in the last 20 years. Only between 2008 and 2018 the average bill went up 70%, and Spain tops among the countries where electricity is most expensive in the EU. Very often I have had conversations at work with people who pay 80 to 100 euros a month not because their consumption is high, but because the price they pay is ridiculous. In a country where the minimum wage is 950 euros, can you imagine paying 10% of your salary so you can switch on the lights at home?
During my training week, I was told that the company I was going to sell supplies for was the most committed in the sector to fight against climate change. They told me that over 90% of the energy distributed came from clean sources. Of course, this sounded ridiculous considering the very same company is the largest oil corporation in Spain, so I decided to research the environmental impact of the Spanish energy sector. Turns out it has been reported to be the most polluting sector in the country. The five largest electricity companies are responsible for 20% of total greenhouse emissions in Spain.
This January, we experienced the biggest snowstorm of the last 50 years. Entire cities were covered in snow, and although the pictures looked amazing, they also revealed yet another sign of the climate disaster we are heading into. That month, as if some kind of macabre joke was being unfolded before our eyes, the price of the kWh in Spain went up by 27%. The low temperatures raised the electricity demand, and so prices went up… Or so they told us.
Madrid was one of the most affected cities by the storm. And the people who suffered the most were the residents of Cañada Real, the biggest shantytown in Europe – located 12km from the centre of Madrid. There, 4500 people (mostly of Roma or Moroccan descent) are suffering the winter conditions without access to electricity since October. The cold was so severe in January that pipes froze, leaving the residents without access to running water. The supply was cut by Naturgy. Apparently, residents in Cañada Real are tapping the supply illegally causing “serious economic damages”.
In a recent call, I spoke to an elderly woman. She told me she does not heat her home in winter because “if I did I would not be able to pay the bill”. In Spain, 10 of every 100 households suffers energy poverty. This means people cannot maintain an appropriate temperature at home, they cannot pay their bills on time, or they have an energy expenditure disproportionate to their income levels. Sometimes it is a combination of all. How is this possible?
José María Aznar was the Spanish prime minister from 1996 to 2004. Internationally he became well-known as his administration supported the US government in the invasion of Iraq in 2003. Domestically he developed a neoliberal agenda that included the privatization of the energy sector in Spain. After retiring from politics, Aznar became a consultant for Endesa, earning 200k a year. He is not the only one who has been recruited by big electricity companies. Felipe González, his predecessor, has made more than 600k working as a consultant for Naturgy since 2010. The list goes on and includes former ministers, MPs, MEPs, etc.
This phenomenon of politicians becoming consultants or board members of big corporations in Spain has been named puertas giratorias – revolving doors. The companies hire them because of their influence and power. They go from politicians to lobbyists, playing a game in which corporate interests are prioritized over the needs of the people.
Working in the call centre has, despite my minimal role, been a challenge for me on an ethical, intellectual and emotional level. Never before have I worked for a company whose values and practices stand against my own. Sharing this story is my way of seeking redemption.
*Rafael quit his job at the call centre before the publication of this article.
The views expressed and experience retold are solely those of the author and do not necessarily represent those of E&M or the companies mentioned in this piece.