Spain eases € 2.6 billion clawback on utility profits

By Inti Landauro

MADRID, October 26 (Reuters)Spain will ease a clawback of utility profits aimed at containing rising electricity bills, Energy Minister Teresa Ribera said on Tuesday, following criticism from energy companies.

Strong demand for electricity as economies emerge from the pandemic, along with infrastructure failures and low inventories have pushed gas and electricity prices to record highs.

Spain unveiled a package of measures last month to counter the surge in prices, including profit clawing and a gas price cap.

Ribera announced several recovery exemptions, including fixed-price electricity supply contracts signed with industrial customers before September 16.

Iberdrola IBE.MC, Spain’s largest public utility, had offered to freeze prices to industrial customers in exchange for a withdrawal from the recovery.

Various other types of contracts will be partially exempt, although Ribera declined to estimate how much money would ultimately be taken from utilities.

“We want to be careful in estimating the impact of the measures,” Ribera said, speaking at a press conference after a weekly cabinet meeting. She pointed out that prices were still very volatile.

Last month, the government said it plans to divert up to 2.6 billion euros ($ 3.03 billion) from Spain’s utilities and put them back into the grid.

The announcement sparked protests from the country’s main utilities, who said the measure was undermining investor confidence in electricity markets and the carbon emissions trading system, and undermining plans to reduce greenhouse gas emissions.

Spain has also proposed to the European Union to revise its wholesale electricity pricing mechanism so that individual member states can have more flexibility in setting electricity prices, taking into account factors such as than the level of cheaper renewable generation capacity on their networks.

High electricity prices put pressure on heavy industries such as steel and cement plants, some of which have already announced production cuts or closures in Spain.

To protect consumers, also affected by rising electricity prices, the government will provide a one-time grant of 90 euros ($ 104.74) to poor households to help them pay for rising electricity bills during the period. winter, said Ribera.

($ 1 = € 0.8593)

(Reporting by Inti Landauro and Emma Pinedo; Editing by Nathan Allen and Jane Merriman)

((Inti.Landauro@thomsonreuters.com;))

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