Spain regains € 3 billion from utility group as energy prices soar

Newsletter: Europe Express

Spain is trying to contain the political damage caused by soaring electricity and gas prices that are putting pressure on governments across Europe, resulting in € 3 billion for energy company profits and temporary tax cuts for consumers. Announced the assault.

NS Soaring prices It is the most serious problem for Pedro Sanchez’s left-wing minority government, which is lagging behind in polls. Wholesale prices reached record levels throughout the summer, but consumer bills rose 35% in the 12 months to August.

In response, the Spanish Cabinet took various steps on Tuesday, including an effort to regain about 650 million euros from energy companies, as well as an assault of about 2.5 billion euros on utility “excess profits”. approved.

The government says it will use this money to reduce household bills by paying consumers infrastructure fees that would otherwise have fallen.

Sanchez also said the sales tax on electricity will be reduced by € 1.4 billion by the end of this year. “We have assured that all citizens will pay the same electricity bill. [this year] Like 2018, “he said, saying that the profit levels of energy companies are” unacceptable. “

Spain’s retail electricity prices are particularly closely linked to the country’s wholesale electricity market, as many consumers pay variable rates rather than fixed rates.

However, rising prices are affecting Europe as a whole due to factors such as China’s demand for liquefied natural gas as an alternative to coal, rising carbon prices and reduced supply from Russia.

“In Spain, people are feeling a personal financial pinch, but this is not a Spanish issue,” said Angel Talavera, Dean of the European Economics Department at Oxford Economics. Much of the world is not yet aware of it because the Spanish market works differently, but sooner or later similar trends will occur in other countries. “

In fact, in the past few days, the French government has proposed to consider increasing the number of people eligible for direct fuel payment subsidies, and Greece has € 150 million to compensate for the recent rise in electricity prices. Announced the Energy Transition Fund.

Last week, benchmark wholesale electricity prices for supply in Germany next year reached more than € 90 per megawatt hour, surpassing the previous summer 2008 record when oil prices approached $ 150 a barrel. ..

Julien Hoarau, head of Energy Scan, France’s utility Engie’s analytics division, warns that markets will remain tight and prices will rise unless Russia’s gas supply levels to Europe during the winter are more clear. bottom. “We’re only in September, so we’re very worried about increasing demand for heating gas in the coming months,” he said.

Italy’s Environment Minister Roberto Singorani warned on Monday that rising gas and carbon prices could raise Italy’s electricity prices by as much as 40 percent in the next quarter.

Rising energy prices also put political pressure on the European Commission, which proposed the next big package in July. Green policyIncludes carbon prices for car fuel and building heating.

The proposal claims to provoke backlash from countries such as Spain and France, hitting poor people who cannot easily switch to more environmentally friendly low-emission fuels.

The MEP was in Strasbourg on Tuesday discussing reforms requiring the approval of the European Parliament with a majority of Member States. To stop criticism, the Commission has proposed billions of euros worth of social funds to support households most affected by the new carbon pricing system.

Additional report by Eleni Varvitsioti and Miles Johnson

* This article has been revised since its first publication to remove references to Spain’s dependence on foreign energy sources, which are relevant to the electricity market as well as the overall energy mix.

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Spain regains € 3 billion from utility group as energy prices soar

Source link Spain regains € 3 billion from utility group as energy prices soar

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