Updated on Monday, 13 September 2021 – 21:58
Fiscal measures will be presented, a review of the regulated tariff and a tool that forces electricity companies to auction energy between traders and industrialists.
High voltage towers and power lines in the Ensanche de Vallecas.Javi Martinez WORLD
The Government will take this Tuesday to the Council of Ministers a package of measures with which it intends to alleviate the price of electricity that soared six months ago and has already marked 13 of its highest levels in history in the 14 days that have elapsed since then. September. To achieve this, the president has decided to declare total war on the electricity companies and, as he announced last night, his idea is to withdraw the extraordinary profits of these companies and redirect them to “cap” the gas bill and thus reduce the electricity bill. “They can afford it,” warned the president.
Council is expected to approve three blocks of measures: fiscal, a review of the regulated tariff and a third that forces the electric companies to auction energy between traders and industrialists. According to the government’s spokesperson, Isabel Rodríguez, they will allow the bill to be reduced “by around 12%.”
One of the fiscal measures, in fact, is already in place, but it could be prolonged in time and even maintained permanently. The VAT reduction from 21% to 10% continue, at least, until December, although it has ended up being insufficient in the face of the price escalation. The Popular Party, which registered a bill with its own measures at the beginning of the month, was also contemplating its consolidation. The disappearance of the sales tax on energy production, of 7%, will also be extended until December 31.
Likewise, the Tax on Electricity, which is currently 5.11%, will be reduced, as announced by Pedro Snchez in an interview on TVE: it will become 0.5%. “It does not seem acceptable to me,” said the president, that there are companies that are having “extraordinary benefits” derived from the energy crisis. The idea, he said, is to “detract the extraordinary profits” from these companies and redirect them to cover the electricity and gas bill. “They can afford it,” said Snchez, who estimates that some 650 million euros of non-emitted CO2, and the same amount of gas, will be withdrawn from these companies. The State has stopped entering until now, with measures such as the reduction of VAT, said Snchez, about 1,400 million.
With regard to the rate revision, Ribera already opened the door to do so at the end of August. The idea is to somehow undo the link between the price and the wholesale market and return in a way to the system that worked until 2013. In this way, the future price would be linked to the cost of energy, with which the invoice would be more stable, without such drastic changes from one day to the next.
This will only affect rate regulated customers – that is, the Voluntary Price for the Small Consumer (PVPC) -, about 10 million people in Spain or about a third of customers. The other two thirds have a fixed rate, which pays a fixed price that is established with certain periodicity (one or several years). Although it is usually somewhat higher in quiet times, avoid these fluctuations. Several power companies have announced in recent days a review of their rates (they are around 60 euros per megawatt hour) precisely to attract PVPC users to the fixed system.
The third measure has already been tried to incorporate -without success- the Government of Jos Luis Rodrguez Zapatero and it is included in the Law of the Electricity Sector of 2013, which gives power to the competent minister to intervene in the price when there is a lack of liquidity or there is no effective competition. It consists of forcing the large electricity companies with relevance in the generation market to sell part of this production in auctions outside the wholesale market, which is the one that is currently setting record prices. Ribera request the CNMC to design the mechanism and justify its implementation due to lack of competence.
In 2007, the Zapatero government designed this mechanism and Joan Clos, then Minister of Industry, ordered Endesa and Iberdrola to auction part of their production between independent electricity marketers and large clients. However, the companies began a legal battle that ended in the Supreme Court, which gave them the reason, since they considered that the price that the ministry had set was too low, allowing it to be bought and resold higher. To prevent this situation from happening again, the Council of Ministers is expected to approve a similar tool, but not to impose prices.
Pay less than in 2018
Based on constant increases, and without ignoring a still very present pandemic, the price of electricity in the wholesale market has gradually become one of the most complex crises for the Executive. Electricity skyrocketed in April and has continued to increase since then and August closed with an average of 105.94 euros. The comparison is also hard if 2020 at mid-gas is ignored: June, July and August were 76.5%, 79.6% and 135.63% more expensive than the same months of 2019, respectively.
After two weeks, the average price for September goes up to 142.58 euros, well above the 41.96 euros that electricity cost in the same month of 2020 or 42.11 in 2019. It is more, yes electricity had a cost of 0 euros during the remaining 16 days, the average price would remain at 66.54 euros, still more than 50% above the previous exercises.
The trend continues to be upward and, in fact, it is expected to reach its maximum peak in November, when it could reach 125 euros on average, by then it will begin to fall, according to reports. Victor Martinez. That is, it is a very gradual decline that will not smooth prices until early 2023.
During the interview on public television, Sánchez pointed out on several occasions that the influence of the wholesale price on the electricity bill is not so great and that it is important to distinguish it from the final bill. Thus, according to the calculations that I mentioned, it only affects 20 or 30%, since the invoice includes several taxes and additional costs that should be lowered to achieve this reduction to the levels of 2018. In any case, the president clarified that this The calculation should be done by discounting the CPI.
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