In PWP-032, Kahn describes the current structure of the electricity industry in Spain and recent changes to its legal and regulatory framework. Electricity pricing policy in Spain is compared with other industrialized countries. The size distribution of firms and the basic regulatory system, the Marco Legal Estable, are described. National policies concerning fuel markets place significant constraints on the flexibility of the industry. These policies include support of the domestic coal industry, the moratorium on nuclear power, and the impending import of natural gas from Algeria. The 1994 electricity reform legislation mandated the creation of an independent regulatory commission, requires competitive bidding for new generating plant and establishes a framework for customers and suppliers who wish to bypass the national system. The extent to which the new law will succeed in introducing more competition in the industry is still in doubt.