Electricity prices have hit an historic high in Spain over the past few months and increased by 34.5% in August.
Today, the Government has announced an emergency plan to reduce bills by 30% and bring this year´s bills down to the level paid in 2018 by the 10.5 million households who have regulated supplies of up to 10kw. (This does not apply to contracts on the free electricity market).
In June this year two measures were introduced to reduce electricity prices: the reduction of VAT (IVA) on electricity bills from 21% to 10% and the suppression of the “tax on production” of 7%. These will remain in effect.
Today Pedro Sanchez announced “cuts in the extraordinary benefits” of the electricity companies and a “cap” on gas prices.
The Government also plans to recuperate 2,600 million euros from the electricity companies by March 31, 2022, through the devolution of the extraordinary benefits gained from the high price of gas on the wholesale market.
Other measures include the reduction of the “Special Tax” from 5.11% to 0.5%; (This revenue goes to regional governments and they will be compensated); and the suspension of the Tax on the Production Value of Electricity which represents 7% of bills.
Changes to the Water Laws have also been made to stop electricity companies draining reservoirs to produce electricity. These changes fix maximum flows from reservoirs under normal circumstances and during droughts to protect natural resources (animals, plants etc) and they will also contribute to achieving the environmental objectives set by the EU.
The measure will also increase water supplies by 15% in the medium term and between 35 to 40% in the long term.
Additionally, the two National Fund projects for the Sustainability of the Electricity System, which will redistribute the energy costs of “historic renewables” among all energy vectors in the next five years, and the retribution of the CO2 not emitted in the electricity market (so called benefits from heaven) will reduce household bills by a further 15%.
As soon as further information is available this article will be updated.
Editors note: A “regulated supply” is an ordinary contract with your electricity company. A “free market” contract is one a customer negotiates on an individual basis with an electricity company on the “free market” for a set price. These latter contracts will not be affected by these changes.
The reference to the changes to the Water Law have been made after an electricity company completely drained a reservoir in order to produce electricity earlier this month.
