Wednesday, December 6

The Government tightens the control of the fallen benefits of the electric companies

The Government is going to reinforce the control of the so-called fallen benefits of the electric companies. As the President of the Government, Pedro Sánchez, advanced on Monday, when unraveling the main lines of the response plan to the war, the royal decree law approved this Tuesday by the Council of Ministers is going to extend until June 30 the mechanism for reduce excess profits in the electricity market caused by the high price of natural gas on international markets, “with certain modifications to strengthen its efficiency and adapt it to European guidelines”.

These modifications, as explained in the press conference after the Council of Ministers by the third vice president and minister for the Ecological Transition, Teresa Ribera, will consist of extending this rule of reduction of the extraordinary benefits that may be produced by the increase in the price of the gas to electricity contracts that are renewed or signed from now on. The maximum price that will be taken as a reference will be 67 euros per megawatt hour (MWh), according to government sources. This price, which is the one that was already set last autumn, is based on the price of the Iberian market (Mibgas) since its creation: 20 euros/MWh.

The reduction has been in force since September, although until now it had been very watered down: in order to carry out the decree that launched it, the Government had to correct it a month later, leaving out bilateral contracts, which significantly reduced its collection, initially estimated at 2,600 million euros. The novelty is that this threshold is now established, which “only takes place on those occasions when contract updates or new contracts are produced”, Ribera insisted.

The vice president recalled that, in its latest communication, the European Commission has determined that this type of mechanism to stop undeserved profits from electricity companies cannot be applied retroactively. “We do believe that on the occasion of the renewal of contracts or the signing of new contracts it is important to incorporate limits.” And he has pointed out that from the information provided by the National Markets and Competition Commission it can be inferred that in recent months contracts have been updated not based on daily prices, but on futures, which have also marked historically high levels in the last months.

This is one of the measures to lower the electricity bill that the Government has approved this Tuesday, while waiting for the price cap to be set for the offers of gas plants, which Spain has to agree with Portugal after the Iberian exception granted by the EU to Spain; a limit that Ribera has asked not to treat “lightly” after on Monday the Minister of Social Rights and leader of United We Can, Ione Belarra, publicly bet on setting it at 30 euros per megawatt hour.

While waiting for this Iberian mechanism, this reinforcement of the control of the so-called windfall profits is added to other measures already announced, such as the reduction of taxes on the invoice, the reinforcement of the social bonus and the advance of the cut in the remuneration of technologies covered by the regime known as RECORE (renewables, special regime and cogeneration): 1,800 million euros that will allow a 55% reduction in charges (regulated part set by the Government) between now and the end of the year. With this, the reduction for an average consumer will be 6 euros per month on their bill, explain sources from the ministry. In addition, these facilities will be allowed to sign bilateral contracts with marketers or large consumers.

In the case of the social bonus, the main novelty is that the income thresholds to qualify for these discounts are increased: the thresholds of the so-called IPREM are increased up to 0.3 times per adult and 0.5 times for children. And there is a “symbolic change” but “important: stop talking about families and talk about cohabiting people” in a home to access these discounts. In addition, the 60% and 70% discounts for vulnerable and severely vulnerable consumers will continue until June 30. And to comply with a Supreme Court ruling from last January, its financing mechanism is extended to the entire electricity business chain (including carriers and distributors).

Another novelty, to speed up the deployment of clean energy and in the face of the accumulation of applications, is the introduction of a “super-accelerated procedure” for the processing of new renewable installations, the smallest: up to 75 megawatts (MW) of wind power and 150 MW in the case of photovoltaic, provided that they take place on land without special environmental protection, and that they do not incorporate cable evacuation systems for more than 15 km. It is a “more agile” procedure but “with all the guarantees” that “has been worked on with the European Commission”. At least 7 GW of access capacity is also reserved for self-consumption

With the plan approved this Tuesday, the electro-intensive industry will see electricity tolls reduced by 80% during 2022, as well as greater compensation for the cost of CO2 passed on to electricity. In addition, the strategic reserves of natural gas will go from 20 days of consumption to 27.5 days, with greater flexibility.

They are also extended for two years and will be granted automatically to beneficiaries of the minimum vital income (IMV), so that the number of beneficiaries will increase by 600,000 households, up to 1.9 million. Finally, the number of companies that are obliged to finance these discounts to comply with the Supreme Court ruling of last January is increased.