Spanish Government Approves Energy Reform
July 17th, 2013
The Spanish Government’s Council of Ministers has approved a raft of measures to bring to an end, once and for all, the imbalances that still exist in the electricity system, establish a regulatory framework that guarantees its financial stability, and improve the supply to the end consumer.
The Vice-President of the Government, Soraya Sáenz de Santamaría, stated that the reform of the electricity sector is necessary in order to correct the tariff deficit, in other words, the difference between what it costs to generate electricity and what is paid for it, and guarantee the sustainability of the electricity system without consumers having to assume the costs generated by this imbalance in the bills.
Soraya Sáenz de Santamaría clarified that the reform has been designed as a definitive solution to the problems of the electricity sector, saying that since 2005, the cost of generating electricity has increased to a total of 26 billion euros, and it has not been possible to reduce this shortfall, inherited from the previous government, despite the cost of Spain’s electricity bill rising by 63% between 2006 and 2011.
The Minister for Industry, Energy and Tourism, José Manuel Soria, acknowledged that the measures adopted “are not easy for anyone but are absolutely essential”. He said: “the reform doesn’t favour anyone in particular. We have done what needed to be done. Until now we have used an unsustainable and uncertain system but from now on we will have a sustainable and certain system.”
Soria pointed out that the price of energy for residential consumers is well above the average in the European Union, despite the measures adopted by the government in 2012. He clarified that if these measures had not been taken, the deficit of the electricity system would have amounted to 10.5 billion euros in 2013 and it would have been necessary to raise the electricity bill by 42%.
The minister announced that the tariff deficit forecast for 2013 is 4.5 billion euros, and that in order to balance the system, the companies will assume 2.7 billion euros, the State 900 million euros and consumers the remaining 900 million euros through a rise in the electricity bill of 3.2% as from August. Soria stressed that the rise for the residential consumer would have amounted to 19% if the reform had not been implemented and the electricity companies and State had not assumed any of the costs.
Soria went on to explain that a rule on financial stability has been established through an automatic review system that will avoid the emergence of new imbalances. The introduction of new costs in the electricity system is avoided provided it is covered by an equivalent increase in revenue. Regional or local authorities must themselves meet any additional costs generated by rules they may wish to apply.
The government seeks to guarantee the supply to the consumer at the lowest possible price and in the most transparent manner. In this respect, the minister stressed that the reform guarantees that the consumer will understand the electronic invoice as a result of its simplification.
The Last Resort Tariff (Spanish acronym: TUR), as used by the majority of domestic consumers, will be renamed the Voluntary Price for the Small Consumer. The process for changing supply company will be speeded up and the mechanisms for customer care are to be enhanced and are guaranteed to be provided for free.
The reform also strengthens the fight against fraud and will modify the toll structure, reducing the cost for the average consumer and penalising second homes and empty properties.
- Spanish Government Approves Measures to Safeguard Healthcare System
- Government Approves Reform of Coastal Act
- Spanish Government Approves Stability and Reforms Programmes