Ribera removes the premiums for renewables from the electricity bill to reduce the price of electricity by 13%

Structural turn in the energy sector. The Council of Ministers has approved a draft law that aims to remove from the electricity bill the cost of premiums for renewable energies to lower the fixed part of the electricity bill to homes and companies.

This cost amounts to around 7,000 million euros per year, corresponding to investments made in the first decade of the century in the heat of public incentives. The objective of the Ministry of Ecological Transition directed by Teresa Ribera is to reduce the bill by up to 13% to make electricity more competitive against other more polluting fuels.

The big question is: Who will pay that amount when the changes are approved? The draft provides for the creation of a National Fund for the Sustainability of the Electricity System (FNSSE) that will be nourished by contributions from energy companies based on their sales of electricity, gas and other fuels. According to a first calculation, the initial cost will fall on about a thousand companies.

They will then have free rein to transfer the new cost to their customers, although sources of Ecological Transition explain that this will depend on the market in which they operate and their level of competition. “There may be companies that decide not to pass it on or that they cannot because it would mean losing market share,” they explain.

In any case, the change implies sharing a cost that right now only electricity consumers suffer among all energy consumers. That is, a consequence will be that the price of automotive fuels will rise, for example, although in the Government they do not give it much importance because its objective is really to promote the electrification of the economy against the most polluting energies. The price of electricity in the liberalized market will also rise depending on what each company decides, while the Government will revise upwards the margin of the marketers that supply the Voluntary Price for the Small Consumer (PVPC), the old regulated tariff.

Ribera has been working for months on this reform and its legal ‘shielding’ against the expected avalanche of resources by energy companies. The change had been insistently demanded by the electricity companies in recent years, who saw this charge as a kind of tax that condemned the country to suffer one of the most expensive bills in the European Union. However, these asked that it be transferred to the General State Budgets to understand that it was a public policy of commitment to renewables.

The change also aims to shield the financial sustainability of the electricity sector, which has once again suffered a revenue deficit in recent years weighed down by the fall in electricity demand and the loss of efficiency of the taxes approved in the 2013 electricity reform. These taxes fell on declining technologies such as coal or nuclear, so their collection capacity has lost strength in recent years.

“Certainty is key to attracting the investments the country needs to reduce polluting emissions. We do not want there to be any doubt about the financial sustainability of the electricity sector, “say sources close to the Executive after closing 2019 with a deficit of 527 million.

The objective is that the draft seen this Tuesday by the Council of Ministers will be approved as a Bill in the coming weeks and will be processed by the Courts during the first half of 2021. This would allow to take out that same exercise a part of the 7,000 million, although the objective is to complete the transfer in a period of five years.

Source: El Mundo