The Government has taken up the gauntlet of reducing electricity production charges and toughening up previous measures on the electricity suppliers as part of its strategy to reduce bills.
The water surcharge has been increased making it more expensive for the companies to produce hydroelectricity (currently one of the cheaper methods of producing electricity) and taxes were increased on the so called “profits which fall from the sky”.
These measures were approved last October to reduce electricity bills. However, the tax on “extraordinary profits” has been rehashed twice and remains completely diluted.
Now, with the support of the EU, the Government has taken up the challenge and will introduce harsher measures including revising bilateral and inter-group contracts (such as Iberdrola, Naturgy and Endesa) which generate and sell within the same company.
Since the energy crisis began almost two thirds of the “hours” produced by hydro technology have been charged at the same higher cost of gas produced electricity, even though the investments in hydroelectricity have been partly repaid and carry lower operational costs.
The Government also proposes to bring forward the settlement of grants on renewable energies and use it to reduce costs.
Under the current market conditions, where prices remain sky high, renewables are bringing in more than the 7.1% predicted. By anticipating this adjustment, instead of waiting for the three year cycle for clearance, the Government could have 1,800 million euros to reduce electricity bills by 55%.
All these measures are temporary as Spain negotiates the conditions of the EU´s permission for Spain and Portugal to come out of the electricity wholesale market, which is driven by high gas prices. This could take three to four weeks.
In the meantime the Government will also accelerate renewable energy projects in order to reduce bills in the short term as the more renewable energy we produce the lower bills will be.
