The electrical system faces the possible suspension of the tax on electricity generation that Junts and the PP have agreed upon in Congress with a narrow margin: an accumulated surplus of only 189 million euros, according to the report of the order project ministerial by which the positions are established for the fiscal year 2025.
PP and Junts have agreed to suspend this tax again “with effect from January 1, 2025 and, as long as the system does not generate a rate deficit.” The order of charges that the Ministry for the Ecological Transition has just put out for consultation estimates the surplus for fiscal year 2023, discounting the advances already made during the fiscal year, at 609,129 million, but calculates that to close “in balance” 2024, according to the information provided by the National Markets and Competition Commission (CNMC), just over 420 million are required. The difference, the remainder of the surplus from previous years, is therefore those 189 million.
The charges, set by the Ecological Transition, are a type of electricity system costs that, basically, correspond to the remuneration of the oldest renewables, the amortization of the debt generated between 2000 and 2013 due to the so-called tariff deficit (the difference that existed between the regulated income and costs of the electrical system), and the extra cost on the islands, Ceuta and Melilla. In 2025 these charges will amount to around 7.4 billion. This is one of the regulated parts of the receipt. The other is tolls, which are set by the CNMC and finance the transportation and distribution networks.
The charges are financed with specific taxes, with part of the collection from CO2 auctions and with direct payments from consumers through the regulated part of the monthly bill, on which about 3.5 billion are charged. To face the energy crisis, the Government reduced charges in autumn 2021 and has kept them 55% below the pre-crisis level in recent years. The difference has been covered with surpluses from previous years and contributions from the General State Budgets.
According to Ecological Transition sources, once the greatest price tensions have been overcome, “it is necessary to return to normality and maintain the financial balance of the electrical system, but with less impact on consumers.” The ministry highlights that “thanks to the Government’s management during these years, the amount of the regulated part of the bill (charges and tolls) passed on to consumers’ bills in 2025 will be 25% lower than that passed on in 2019.”
“Adding all the amounts, the bill expected for 2025 for a residential consumer is 7% higher than that of 2019, much lower than the accumulated inflation of these years (of the order of 18%).” The same sources highlight that if before the crisis households paid more for electricity than the European average, now they pay less; “Electricity will be 30% cheaper than Germany in 2025, according to futures contracts.”
This competitive advantage has its origins in renewables. Recently the Bank of Spain calculated that in 2030 electricity will be 50% cheaper than today thanks to clean energy.
Sara Aagesen’s department highlights that in recent years the aid framework for vulnerable consumers has been reinforced, with structural discounts on the social bonus higher than those existing before the crisis (35% for vulnerable and 50% for severely vulnerable, compared to to the 25% and 40% discounts in force and until then) and other support measures. “Thanks to the reinforcement of social bonus discounts, in the case of vulnerable consumers, the bill in 2025 is expected to be lower than that of 2019.”
The transactional amendment drafted by Junts and agreed upon with the popular parties has been incorporated into the report of the Presentation of the Bill that regulates the greenhouse gas emission rights trading regime. 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.
It remains to be seen if it finally comes to fruition. The Government has the power to veto amendments to a bill “that entail an increase in credits or a decrease in budgetary income”, but 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 Tuesday, the commission’s board analyzes whether to call off the meeting scheduled for Thursday and in which the go-ahead should be given to a reform that, for the most part, introduces European regulations into Spanish legislation. Socialist sources assure that the commission’s own plenary session could deactivate the amendment, but this would require some of the groups that supported it to now vote against it. The socialists think about their parliamentary partners: ERC, PNV and Junts itself.
From the other government partner, Sumar, he 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.
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.”
Ecological Transition emphasizes that the approved amendments are “unrelated to the European transposition” of two EU directives relating to emission rights, “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 rule has new features that apply from January 1, such as the application of the Border Adjustment Mechanism (the community tariff of CO2) or the extension of the CO2 emissions trading scheme to road transport and buildings.
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 CNMC. But that surplus has been consumed to pay for the reductions in electricity charges to 55% and the exemption of tolls 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 it 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.
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