Spain’s government on Tuesday approved emergency measures to help households pay for the rising cost of electricity, and promised to cap profits made by power companies as a result of the recent surge in the price of natural gas.
Natural gas wholesale prices across Europe have risen nearly five times from 2019 levels. Rising prices are driving up electricity bills, as gas is often used to generate electricity. Some other European governments have also recently outlined plans to help consumers, including Greece, where the government is setting up a fund. to bribe Payment of electricity bills of households.
In Spain, rapid growth has become a political problem. Pedro Sánchez, the socialist prime minister, leads a minority leftist coalition government, which relies on the support of Unidas Podemos, a party committed to protecting the most vulnerable families. The package of emergency measures will, among other things, protect poor families who cannot pay their bills by extending the grace period before utilities cut power.
Mr Sanchez announced the government’s action after outlining his plans in a television interview on Monday night. Without providing details, he said about 650 million euros (about $770 million) of the “extraordinary profit” would be taken from energy companies and “redirected to consumers.”
Some people welcomed this decision of the government. Javier García Breva said, “No Spanish government has dared to take the energy companies controlling our market as an oligarchy, so I consider it historic, but obviously it is a lot in these companies.” It’s annoying.” Former Spanish parliamentarian and renewable energy expert.
But Edmundo Bal, an opposition politician from the Ciudadanos party, said Mr Sanchez was applying a “patch” to the energy problem quickly, rather than looking for a long-term solution.
Electric companies said the move would be counterproductive. Natural gas prices have risen across Europe due to a variety of factors, including a resurgence of global demand following pandemic lockdowns and a late winter chill reducing storage levels.
Iberdrola, one of Spain’s three major electric companies, said energy prices were rising due to “international factors” and would not be hindered by government action. The union representing Spain’s nuclear power producers threatened suspend operations In reply.
Mr. Sanchez pledged to reduce the electricity rates paid by consumers to 2018 levels, excluding inflation. The measures approved on Tuesday include a cut in electricity generation tax, which is to be paid by consumers by the end of this year. In June, the government reduced the value-added tax paid on electricity bills from 21 per cent to 10 per cent.
The latest figures from the Office for National Statistics show that last month Spaniards paid about 35 percent more for their electricity than a year ago, while the wholesale price of electricity has continued to rise in recent weeks.
Spain’s Ecological Transition Minister Teresa Ribera told reporters that the emergency measures would help reduce households’ monthly electricity bill payments by 22 percent.
To achieve this goal, the government will limit profits made by energy companies from rising natural gas prices around the world until at least March, when the situation is reviewed.
Ms Ribera said the forecast for the coming months points to a spiral without precedent, which in turn affects “the well-being of families and the entire Spanish economy.”