MADRID – General Affairs Minister Félix Bolaños promised on Wednesday that the government will cut skyrocketing consumer prices for electricity, gas, and fuel. The cut will be approved on March 29, regardless of the outcome of the upcoming European summit.
In a press conference, the minister emphasised that the Spanish government is very much aware of the price that households currently have to pay to fill the tank, pay the electricity bill, and heat the house. “So what we’re going to do is simply lower the price with immediate effect,” said Bolaños. The price reduction applies to Spanish households, companies, and the self-employed.
Unanimity on price reduction
Just before Bolaños’ press statement, Finance Minister María Jesús Montero had already announced that various alternatives were being looked at to compensate for the high prices. This could be done with a direct grant, or with a tax arrangement. Confirmation of the government’s intention to protect the purchasing power of the Spaniards also came from Employment Minister Yolanda Díaz. “The cabinet will take all necessary measures to make that happen,” she said.
OECD Secretary-General Mathias Cormann defended a tax increase for electricity companies during his visit to Madrid last Monday. That should put a stop to the rampant price increase of recent months. This has already happened in countries such as Italy and Romania. According to a calculation by the International Energy Agency (IEA), at current market prices, energy companies can generate an additional turnover of around €200 billion in 2022 from gas, coal, nuclear energy, hydroelectric and renewable energy.
Market mechanism review
The European Council will meet up next week on Thursday 24 and Friday 25 March. The meeting will include all heads of government and elected heads of state of the 27 member states. Furthermore, it will show how far the EU is prepared to go to contain the rise in electricity prices. Consequently, they hope to reach an agreement on this during the meeting in Brussels. However, it is anything but certain that an agreement will come about. Spain and a number of other southern countries argue in favour of applying a price ceiling on the wholesale market. However, Germany, for example, chooses not to intervene in this market mechanism. The European Commission, the executive board of the EU, has been asked to come up with concrete proposals on a possible revision of the energy market mechanism.
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