Spain introduces emergency measures for electricity price compensation

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Consumers to be compensated for high electricity price

After intensive negotiations, coalition partners PSOE and Podemos have reached an agreement on compensation for the high electricity price. In particular, consumers and small and medium-sized enterprises (SMEs) can benefit from the new emergency measures.

An important measure is that the so-called windfall gain (‘beneficios caídos del cielo’) for sustainable electricity companies will come to an end. All electricity companies receive compensation from the Spanish government for the expensive CO2 emission rights. Renewable electricity companies do not pay these CO2 rights, but have until now been compensated for this.

Electricity price no higher than in 2018

With the withdrawal of this compensation, €65million will be saved. That can go directly to compensate consumers and small consumers for the high gas and energy bills. In an interview with TVE, Prime Minister Sánchez recently said Spanish households could count on energy bills to be the same by the end of this year as in 2018.

Until last week, PSOE kept silent on the planned emergency measures. Unidas Podemos has been pushing for weeks to take action on the historically high gas price. It was only last weekend that negotiations finally took place; the parties agreed to end the ‘beneficios caídos del cielo’.

Savings of €65million directly to households and SMEs

The Ministry of Ecological Transition wants to pay the lion’s share of the government intervention from the state coffers. This decision is not backed by Podemos. The ministry also wants to further reduce VAT to 4% from January. The tax authorities also consider this measure necessary if the electricity price continues to rise. This is despite the fact the European Commission strongly opposes this decision. For the time being, the energy bill of Spanish households and SMEs is being softened with the aforementioned €65 million.

Tuesday’s Council of Ministers will also give the green light for reducing the electricity tax (IEE) from the current 5% to 0.5%. The current special tax rate of 7% (impuesto a la generación) will also be maintained for electricity companies until the end of this year.

Prime Minister to Barcelona for dialogue with Catalonia

The Spanish prime minister also announced he will be present next Wednesday at the opening of negotiations with the Catalan government. Prime Minister Sánchez and Catalan President Aragonès will have a joint meeting prior to these negotiations. After the opening, the Central Government will be represented by the Minister of the Presidency Félix Bolaños, Vice-President and Minister of Employment Yolanda Díaz, Minister of Territorial Policy and Government Spokesperson Isabel Rodríguez, Minister Raquel Sánchez of Transport, Minister Miquel Iceta of Culture and Minister Manuel Castells of Universities.

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