The Spanish government has announced an urgent reduction in electricity taxes in an attempt to end the political crisis related to electricity prices after the country recorded the highest prices in Europe.
That’s what The Times reports.
Prime Minister Pedro Sanchez also announced a cap on gas prices and promised to redirect the profits of energy companies to lower electricity prices.
Socialist leader Sanchez said it is unacceptable that energy companies profit from higher market prices for electricity.
“We’re going to take the extraordinary profits that the energy companies make and we’re going to pass it on to consumers,” he said.
The special tax on electricity will also be reduced from 5.1 percent to 0.5 percent.
According to the prime minister, these measures will reduce state revenues this year by about 1.4 billion euros, and 650 million euros will be deducted from the profits of energy companies and redirected to consumers.
“There are energy companies that are making huge profits right now. This is unacceptable to me because these are profits derived from inflated energy prices. We have made a firm commitment that all citizens will pay the same electricity bills this year as they did in 2018,” he added.
The government said the price increase was due to high demand, rising prices for imported gas needed to meet Spain’s energy needs, and an increase in the cost of carbon certificates, which give companies the right to emit carbon dioxide.
Disagreement was growing within the government over this issue. Leaders of the Socialists’ coalition partner, the leftist Podemos, insisted on price controls.
In Spain, retail electricity prices are closely tied to the country’s wholesale electricity market, dependent on imports, and many consumers pay variable rather than fixed rates. Spot electricity prices, which make up about a third of consumers’ electricity bills, broke records in weeks, reaching a record 154.16 euros per megawatt-hour on Monday, according to market operator OMIE.