MADRID – The rise in energy prices in Europe, driven by gas, has left no one untouched. Consequently, Spanish households will pay a lot more as a result. Even with the effect of the government’s measures to contain cost increases.
According to a Bank of America survey published on Wednesday, European electricity prices have risen by 300%. This causes an additional cost of 476 euros for households in Spain.
In concrete terms, the additional cost of €476 means a 52% cost increase in the annual energy expenditure of €922 that Spanish households had on average in 2020. Of this, €759 is for the electricity bill and €163 for the gas bill.
The cost increase of 300%
The entity emphasises that European wholesale gas and electricity prices rose from already high levels at the end of December. For example, for 2022, gas supplies increased by more than 400% compared to January 2021, while European electricity prices, powered by gas, increased by 300%.
The report shows that the government has succeeded in limiting the cost increase of energy prices with measures. As a result, household energy expenditure was €169 lower than would have been the case without measures. However, this reduction will only offset a third of the additional costs that Spanish consumers will face between 2021 and 2022.
One of those measures was a reduction in taxes included in consumer electricity bills. The VAT was reduced from 21% to 10%. The special electricity tax was reduced from 5.11% to 0.5%, the legal minimum. The suspension of the 7% generation tax paid by companies will remain in place for the time being until March 31.
A total impact of 9 billion euros in Spain
The Bank of America estimates the impact of the current energy price crisis on key European countries at around €107 billion.
On an absolute level, the escalation of energy markets in Spain resulted in an accumulated overcharge of €9 billion per year. That is more than in Portugal. Here the additional costs are €700 million. This is far behind the United Kingdom (€27.7 billion), Italy (€24.5 billion), Germany (€23 billion), and France (€22.1 billion).
In that sense, according to the Bank of America, government aid measures have an annual cost of €3.2 billion. In France, it is €14 billion, In Italy €8.8 billion and €300 million in Portugal.
Higher cost overrun for countries with greater gas dependence
At the European level, the report indicates that the average bill in Western European countries will reach €1,850 at the end of 2022. This was €1,200 in 2020.
Less dependency on gas, a muted increase in costs
The increase has been between 20% and 30% in 2021. Therefore, the financial institution expects a net increase of up to 40% this year. Countries less dependent on gas, such as Portugal, will experience a more muted increase. This is relative to countries such as Italy or the United Kingdom.
By the end of 2022, Italy and the United Kingdom will register an additional cost of respectively €939 and €941, 77% and 69% more compared to energy expenditure in 2020. France is lagging with an additional €730 (52% more), and Germany, which registers a surcharge of €568 (+37%). However, Portugal will have the lowest growth at the end of 2022, with €181 more than in 2020 (+23%).
