The third vice president of the Government and Minister for the Ecological Transition, Teresa Ribera, has announced in Congress new additional measures to the Royal Decree-Law that cuts the extra income of electricity companies due to the rise in gas, which is voted on Thursday in Congress .
“In the coming weeks we hope to be able to complete it with additional measures that guarantee coverage through bilateral contracts and reasonable prices prior to the spiral of natural gas for the industry, simultaneously reinforcing the position of vulnerable consumers benefiting from the social bonus,” Ribera announced .
After the warnings of the PNV, preferred partner of the Government, the vice president has wanted to “make it clear” that the reduction of the extra income of the electricity companies only applies to “those who have internalized” the rise in gas and not to those who have “guaranteed” stable prices before the rally of this raw material. His department, he explained, is working on the implementation of measures for the “correct application and development” of the decree.
The announcement comes after the round of meetings that the vice president has held in recent days with representatives of the industry, consumers and with the executives of the electricity companies on the eve of the validation of the decree, which has roused the sector. Last week Ribera was open to withdrawing the cut if the European Commission takes measures such as those demanded by Spain to decouple gas prices from electricity prices.
Brussels has not done so, by presenting this Wednesday Brussels a package of proposals to the member states in the face of this energy crisis that the minister described as “manifestly incongruous” after meeting with Ignacio Sánchez Galán, president of Iberdrola, the company that has raised the most the voice against the decree that is validated this Thursday.
In September, the electricity bill of domestic consumers soared 44% year-on-year, according to data just published by the National Institute of Statistics (INE). It is an unprecedented rise in the INE series, which covers until 2002. The rise compared to August was 10.9%. The INE has confirmed that the CPI stood at 4% last month, the highest rate in 13 years, due to the rise in electricity.
However, the year-on-year comparison is distorted by the staging effect of 2020 in which the pandemic plunged prices in the wholesale electricity market. That year-on-year increase of 44% is higher than the previous record in June, when the increase compared to a year before was 37.1% according to the INE. Then, the Government addressed a first package of urgent measures of a fiscal nature, among them, the reduction of the VAT on electricity to 10%.
In September, and to fulfill the promise of the Government, Pedro Sánchez, that the bill this year will be at the same levels as in 2018, the Executive approved the Royal Decree-law that is being debated this Thursday. Its most controversial measure is to temporarily reduce (until March) the extraordinary benefits that, according to the Executive, nuclear, hydroelectric and renewable plants were receiving as a result of the marginalist price formation system due to the stratospheric rise in gas. This fuel has become 400% more expensive since April.
More than 5,000 million
The Government estimated the cut in September at 2.6 billion euros, but the electricity companies raise the figure to more than 5 billion because gas has continued to rise since then. Last week, the reference of the Iberian market for Mibgas gas reached more than 100 euros MWh, compared to the 63 MWh at which it was trading when the Royal Decree-Law was approved.
As explained by the third vice president in Congress, Teresa Ribera, “the forecasts for September have been out of date” and we must “adapt them to the new circumstances.”
In September, the average price of the wholesale electricity market stood at 156.27 euros per megawatt hour (MWh), almost four times more than a year earlier (less than 42 euros) and 47% higher than that registered in August. So far in October, the so-called pool has comfortably exceeded 200 euros / MWh and for now is, on average, above that barrier.
The cut of the so-called ‘profits fallen from the sky’ only takes into account the extra income obtained by gas above 20 euros / MWh – which is the average price of this raw material in recent years – and discounts the 90% of the extraordinary income of the companies.
The utilities, which last year assured that the minimums of the pool led their nuclear plants to operate at a loss, now assure that they have a large part of their production sold this year and the next at fixed prices much lower than those set by the pool and that many renewable plants suffer from reduced income. This affects green energy facilities that no longer charge a premium.
Pedro Sánchez was already willing in Congress on Wednesday to “clarify and specify what is necessary” of the decree after the warnings of the PNV, which urged him to “retouch and reorient” the measure after the stoppage of several industries after the electricity companies have urged the renegotiation of contracts with large consumers on the grounds that the decree leads them to losses.