June 15, 2021

The Government cuts the revenues of the main electricity companies by one billion euros


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The Council of Ministers has agreed to initiate the processing of a draft law with which to reduce the so-called ‘benefits fallen from the sky’ (‘windfall profits’) of nuclear and hydraulic power plants, which will mean a cut of about 1,000 million euros in the remuneration received by electricity companies in order to reduce the electricity bill of the electricity companies by between 4% and 5%. domestic consumers.

Specifically, the proposal, which now opens the public hearing process for approval, goes through a mitigation mechanism for part of the carbon dividend received by non-emitting technologies prior to 2005 (hydraulic and nuclear).

At a press conference after the Council of Ministers, the fourth vice president and minister for the Ecological Transition, Teresa Ribera, defended the need for the benefits from the rise in carbon dioxide (CO2) prices to also affect domestic consumers and industrial companies and not only in “the income statements of companies.” «It is legitimate maximize its profit for the companies, but we must ensure as a government for the of the Spanish, “he said.

This measure goes hand in hand with the National Fund for the Sustainability of the Electricity System (FNSSE), with which it is planned to remove the cost of the oldest renewable premiums (around 6,500 million annually) from the electricity tariff and distribute it among all energy sectors, with the aim also of making the receipt cheaper, which has also been elevated this Tuesday by the Council of Ministers to a bill for submission to the Cortes, after overcoming the public consultation period.

A five-year horizon

With both measures, the Government plans to lower the electricity bill for consumers by around 15% at the end of a five-year horizon, since the application of the so-called ‘green fund’ is gradual – 20% each the five years.

Sources from the Ministry for the Ecological Transition and the Demographic Challenge defended that the mechanism for end the ‘windfall profits’ of nuclear and hydraulicsAlthough it will also affect some wind power plants prior to 2005, it is legally “robust”, which is intended to shield against the more than certain demands by electricity companies, and is “compatible” with the internal energy market and with the CO2 market.

Thus, they estimated that the proposal would respect the European regulatory framework and would be similar to the one that already existed between 2006-2009, with the reduction of a part of the CO2 ‘dividend’ to non-emitting plants prior to 2005 that sell energy on the market.

This cut in the overpayment of hydraulic and nuclear generation, included in the coalition pact between PSOE and Unidas Podemos, mainly affects Iberdrola, Endesa and Naturgy, and to a lesser extent, EDP Spain and Acciona, owners of these assets.

Likewise, with this income from the mechanism, part of the electricity bill of severely vulnerable consumers at risk of social exclusion will be covered, with 10% of the percentage of income.

The remaining 90% will be used to finance the costs associated with the specific remuneration scheme for renewables, cogeneration and waste (Recore), which means that what all sectors will have to contribute to the FNSSE will be less and «will both reduce the impact on the sector electrical as in other energy vectors ”, added the same sources.

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