Junts has agreed with the PP to introduce an amendment to a law in Congress to once again suspend the 7% tax on the value of electricity production from 2025. The initiative has prospered because it had the support of Vox, ERC and PNV, and it went ahead despite the rejection of the two Government partners, PSOE and Sumar. The absence of a socialist deputy prevented the amendment from being overturned. The next steps are to go to commission and then to Plenary, although the PSOE is looking for a way to reverse it. If definitively approved, this tax that Mariano Rajoy’s PP implemented in 2013 would be suspended again.
The transactional amendment drafted by Junts and agreed with the Popular Party states that “with effect from January 1, 2025 and, as long as the system does not generate a rate deficit, the 0 percent rate will be applied” to this tax. The amendment has been incorporated into the report of the Presentation of the Bill that regulates the greenhouse gas emission rights trading regime.
It remains to be seen if it finally comes to fruition. Although the Government has the power to veto amendments to a bill “that entail an increase in credits or a decrease in budgetary income”, its incorporation as part of the text of the presentation prevents the Executive from activating this formula since it will arrive to the Plenary not as an amendment, but integrated into the bill.
But the PSOE is trying to redress its group’s mistake on Monday. This same Tuesday, the committee table has called off the meeting scheduled for Thursday and in which the approval should be given to a reform that, in its bulk, introduces European regulations into Spanish legislation.
PSOE and Sumar thus gain time to, according to socialist sources, try to get the commission’s plenary session to deactivate the amendment, but this would require some of the groups that supported it to now vote against it. The socialists think about ERC and PNV. With a change of vote of both, the amendment would leave the text of the presentation and then the Government could veto it.
From the other government partner, Sumar has demanded that the PSOE “use parliamentary mechanisms” to prevent the amendment from being approved. “We want to maintain the tax,” said the spokesperson, Verónica Martínez.
1.1 billion euros per year
The collection of this tax is about 1.1 billion euros per year. Asked about this matter after the Council of Ministers, the minister spokesperson, Pilar Alegría, has not clarified whether the Executive is going to veto this amendment, which “is in the presentation phase”, an “absolutely initial” process. “There is a lot of processing and a lot of debate ahead,” said Alegría, who pointed out that the Government is “perfectly aware of the parliamentary minority situation we have” and that “the citizens decided on July 23.”
From the Ministry for the Ecological Transition they indicate that the approved amendments are “unrelated to the European transposition” of two EU directives related to this regime that updates the emission rights regime, “a decisive tool for the decarbonization of the Spanish economy “, and that this transposition “is urgent”, given that the deadline to incorporate them into the Spanish legal system has been “barely seven months”, and the norm has new features that apply from next January 1, such as the application of the Mechanism Border Adjustment (the community CO2 tariff) or the extension of the CO2 emissions trading regime to road transport and buildings.
This regulation affects 900 industrial and energy facilities, 30 air operators, 600 shipping companies and some 1,000 fuel distributors, which have great legal uncertainty and risk of litigation. “It is necessary to eliminate this legal uncertainty and the economic damage that the lack of a legal framework can cause to a large number of economic and industrial sectors”, and that “lead to a decrease in their competitiveness compared to their European counterparts”, they emphasize from the Sara Aagesen’s department.
The Government “is studying various options to achieve the transposition of European regulations, determined by its ambition to fight climate change in a climate emergency scenario and by its commitment to companies and economic sectors that are taking steps towards their decarbonization”, adds Ecological Transition.
The tax on electricity generation has already been suspended since the end of 2018, when the price of electricity began to skyrocket in the wholesale market. And it was suspended again during the energy price crisis derived from the war in Ukraine. It is currently set at 7%. With this amendment the rate would go back to zero. In the last closed year, 2022, the electricity system recorded a surplus of around 6.2 billion euros, according to the latest final settlement of the National Markets and Competition Commission (CNMC). But this surplus has been consumed to pay for the 55% reductions in electricity charges (the part of the bill that finances the oldest renewables or the debt accumulated by the old tariff deficit) and the exemption of tolls (the payments for pay for networks) for large industry.
The tax was approved by the Government of Mariano Rajoy to stop the multimillion-dollar tariff deficit (difference between income and regulated costs) that in 2012 threatened to bankrupt the electricity system. The Court of Justice of the EU endorsed it in 2021. Junts has agreed to eliminate him with the PP, coinciding with the call by former Catalan president Carles Puigdemont this Monday for Pedro Sánchez to submit to a question of confidence.
To justify the introduction of this amendment, Junts explained that the White Paper for the tax reform that the Government commissioned recommended eliminating this tax figure, since it does not differentiate between the different generation technologies and thus harms the energy transition.
The PP assures that the suspension of this tax, which is charged to electricity generators but which the electricity companies then pass on to consumers in wholesale market prices, will mean an estimated “savings” of 400 million euros for Spanish families. In the case of SMEs, the savings will be 500 million, and 200 million for large industries.
From the popular ranks they describe the approval of the amendment as a “parliamentary success promoted by the Popular Group, whose entry into force will allow lowering the price of the electricity bill for families and companies, something that the GPP has been demanding since September of the year 2018”. The popular ones have also supported another amendment that “favors” the continuity of the cogeneration industry. In this case, to extend its useful life and avoid the cessation of its activity as of December 31.
The amendment, presented by ERC and Junts and supported by PP, PNV with the abstention of VOX, “will allow heat-intensive industries to keep their plants in operation until the remuneration derived from the new regulatory regime is approved and awarded, if applicable. of these technologies, which the Government must approve as soon as possible,” explained the employers’ association Cogen España in a note.
Both measures were part of the energy plan that the leader of the PP, Alberto Núñez Feijóo, sent to Moncloa on September 12, 2022. The popular parliamentary group “hopes that, in the face of this new defeat that shows the extreme weakness of the Government in Congress and the absence of a solid majority to legislate, the PSOE and Sumar do not try to maneuver, as they have done on other occasions, to block the call of the Commission and prevent the report that incorporates said amendments from seeing the light.”
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