The Government’s hack to lower the light will cost the electricity companies 2,600 million

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The Government has just approved a battery of measures that are not only aimed at lower the price of the electricity bill, but also the gas for winter. And it will do so with seven specific measures that point directly to the utility’s profit waterline, by forcing them to return some 2,600 million ‘supervening remuneration’ due to high gas prices and taxation on the bill.

The objective, according to ministerial sources, is that “consumers pay this 2021 an amount equivalent to the amount they paid in their bills during 2018, adjusted by the CPI”, about 600 euros per year in the case of an average consumer in low voltage. And not just homes, “the high price of electricity puts economic recovery at risk, and also impacts industries and companies in general. “

It will also reform the Water Law in its article 55.2 for protect water resources, after the controversy over the emptying of the reservoirs this summer. “The hydrographic confederations will apply criteria for the rational use of dammed water to protect the environment and combine electricity generation with other sustainable economic activities,” they said.

Fiscal measures

One of the first steps is to further protect vulnerable families suffering from energy poverty. “It is a priority of this Government, so as of today the four months that had been established so that no electricity can cut the supply to those who cannot pay it, we extended it up to six months“.

Ministerial sources have explained that this measure is included in the Electricity Sector Law and will be integrated into the Minimum Vital Supply which requires that all homes can have a minimum power of 3.5 kW, “which are the minimum conditions of comfort.”

“We have been working for a long time with structural measures and there are some that are in the parliamentary process, but we need other conjunctural until the upward gas ‘rally’ in international markets ends, which according to futures markets, will be at the end of the first quarter of 2022 “.

For this reason, its main course is the tax rebates. “There are those already known, such as the suspension of Electricity Generation Tax (IVPEE) until the end of the year, which means a 7% reduction in the accounts of the companies that generate energy, or the reduction of the VAT from 21% to 10%, which will remain until March of next year “.

Also the one announced yesterday in a television interview on President of the Government, Pedro Sánchez, the reduction to the community legal minimum of the electricity tax, from 5.11% to 0.5%. “As we know that this affects the collection of the Autonomous Communities, the impacts on their economic resources will be analyzed and a way to counteract it will be sought.”

Finally ,, “there will be An additional € 900 million (currently 1.1 billion earmarked) from CO2 auctions to finance the costs of the electrical system that would be deducted from the bill of all consumers “.

Shock against the electrics

However, his main workhorse is aimed at the ‘supervening retribution’ that is observed in the great electrical ones. “Those technologies that do not have to bear the high prices of raw materials and are also not emitters, that is, nuclear, large hydro and renewable parks ‘a merchant’, will be subject to this regulation.”

It is about temporarily reducing the extraordinary income that is causing the high price of gas in some power plants, with a formula similar to that used to reduce the ‘carbon dividend’ of non-emitting plants, now pending in Congress.

With current levels, some 2.6 billion until March 31, 2022, at which time it is expected that the tensions in the global gas market have been overcome. “They will be required to return these benefits month overdue and with a calculation that detracts from them 90% of this amount“.

“The projection for the coming months draws an unprecedented spiral that generates an amplifying effect on the price of electricity and that has a significant impact on systemic in the well-being of families and in the whole of the Spanish economy ” has declared Teresa Ribera, third vice president of the Government Minister for the Ecological Transition and the Demographic Challenge (MITECO), during the press conference after the Council of Ministers.

Electricity auctions

Another novelty is the ‘obligation’ of the dominant market operators (Iberdrola, Endesa, Naturgy and EDP) to go to auctions for the sale of their electricity in the long term to marketers that they want and that in no case may be from the same vertical companies. This means that They will offer 15,830 GWh, equivalent to 6.3% of the national electricity demand in 2020.

The first auction is expected to be called before the end of the year and the settlement period will be equal to or greater than one year.

The law also provides for the reform of the regulated tariff –Voluntary price to small consumers (PVPC)so that it incorporates the auction price reference with a maximum weighting of 10%. Free trading companies that purchase energy in this way must indicate this on their customers’ invoices.

“The PVPC will continue to function as before, but the government is studying a possible future reform,” ministerial sources have said.

Both the measure of limiting the profits of these companies and the new auctions are expected to end up being prosecuted, which on the other hand, is usually common in this sector.

Gas price control

The growth of the gas tariff (TUR) for domestic users up to the maximum of 4.6%. It is intended to prevent a strong increase due to the impact of the cost of raw materials on heating bills, facing winter, which could be between 29% and 40%.

The amounts owed will be passed on in subsequent reviews, with a buffer mechanism similar to the one existing for butane cylinders.

Emptying the reservoirs

The last measure has more to do with environmental problems than with the price of electricity. The Water Law is modified to avoid massive discharges. The hydrographic confederations will be in charge of setting a minimum and maximum regime of monthly flows to be discharged in reservoirs greater than 50 Hm3.

This decision will make it possible to face the effects of climate change on the availability of water in Spain, which are higher than 15% in the medium term and between 35% and 40% in a long-term horizon.

These measures are in addition to the two bills that the Government has sent to the courts for approval, and for which the Council of Ministers has approved its processing through the emergency route. The first creates the National Fund for the Sustainability of the Electricity System, which will redistribute the cost of historic renewables among all energy carriers; the second acts on the CO compensation2 not issued from the electricity market. Its complete application it will reduce the final household bill by more than 15%.

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