Spain helps reduce energy bills of 40% of households

by Lorraine Williamson
energy bills

MADRID – Spain is earmarking €3 billion in the state budget to cut the energy bills of 40% of the country’s households to cope with the impact of the energy crisis. 

The Council of Ministers approved a royal support decree to this effect on Tuesday. The government thus finances the discount for natural gas consumers. Furthermore, that discount will be extended until the end of 2023. Limits are also set on the TUR rates for community boilers to limit the increase in gas bills by 5%. These limits will also be in effect until the end of next year. 

At a press conference after the cabinet meeting, Ecological Transition and Demographic Challenge Minister Ribera emphasised that this royal decree represents the tenth package adopted by the government since June 2021. It was created for the following reasons;

  • to protect families and the country’s industries
  • accelerate the transformation of the energy system
  • to respond to the energy crisis caused by Russia

She stressed that this new package of measures with “temporary and extraordinary” tariffs for consumers affects a total of 18 of the 73 measures included in the emergency plan approved last week. This means that 29 of the 73 measures have already been activated. 

Reduction in municipal heating costs 

In the specific case of the reduction in municipal heating costs, the district savings protection scheme through the TUR tariffs will benefit 1.7 million households. These are expected to save 50% on their bills. To take advantage of this, consumers must have installed individual meters and have their boilers checked by 30 September 2023. 

In addition, the government limits the potential penalty for terminating natural gas contracts. This includes the immediate termination of any related service contracts. 

The flexibility of gas contracts for the industry 

Also, the measures to ease natural gas contracts for industry and the reduction of extraordinary revenues due to the effect of natural gas, which was approved in September 2021, will be extended until December 2023. 

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In this way, the gas cut that the government launched more than a year ago to return some of the extraordinary profits of the energy production companies to consumers will remain in effect until at least the end of 2023 

Reinforcement of social subsidies 

Along with these measures, the newly approved package, which complements the emergency plan launched by the government last week, will strengthen subsidies – electrical and thermal – for vulnerable or large families. 

For example, new discounts of 40% will be included in the electricity bill for 1.5 million working low-income households. And the current social premium, which is covered by 1.3 million households, will be strengthened. 

The measures also give consumers more flexibility. Self-employed persons and companies can make changes to the contracted capital more flexibly than at present until 31 December 2023. 

The discount for vulnerable consumers will also be increased from 60% to 65%. Furthermore, for seriously vulnerable consumers, it will be increased from 70% to 80%. And the amount of energy entitled to these discounts will be increased by 15%. 

More transparency in bills leads to more successful savings 

Another important point that the government wants to improve is the transparency of energy bills. This must include information about the average consumption of consumers in the same postcode area. In addition, detailed information should be provided on the contribution of the Iberian mechanism applied since June last year to limit the price of gas for electricity generation. 

Ministry sources indicated that they expect these changes to the energy bill to be processed as early as December. It is expected that when information about energy consumption is clearer, consumers will be able to take better measures to save energy. 

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