The first option was to apply, as it has the fastest effect. Tax deductions applied to the electricity billThe one that was later extended to the natural gas bill and is still active. The government’s estimation is that tax cuts on energy bills are saving families and businesses. 18,000 million euros in less than two years, As highlighted in the new Stabilization Plan 2023-2026 submitted to the European Commission.
The Ministry of Economic Affairs, under the command of Vice President Nadia Calviño, to Brussels “The biggest energy tax cut in history” to contain inflation as part of the overall anti-crisis plan, which includes measures to mitigate the impact of rising prices on citizens and companies during the energy crisis and to deal with the economic impact of the war in Ukraine.
“m clusterMeasures taken to date have exceeded 35,000 million Euro, which is almost 3% of GDP. To this must be added the 10,000 million guarantees provided to Spanish companies in March”, the new version of the Government Stabilization Plan points out. “The cost of over 35,000 million dollars of measures adopted so far includes the largest energy tax cut in history with an estimated impact of approximately US$2.5 billion. 18,000 million euros Since it began to be implemented in June 2021.”
And almost two years ago, in June 2021, when the Administrator already decided to reduce the VAT on the electricity of small consumers from 21% to 10%, as well as temporarily suspended the 7% tax on electricity generation. and the special tax on electricity was reduced from 5.1% to 0.5%, the minimum allowed by Brussels. By completing the tax cuts, the government brings the discount up to 5% of VAT on electricity and applies it to the natural gas bill, and with the last extension, it extended the tax cuts until the end of 2023.
A shield for everything 2023
The government is arming and re-equip successive anti-crisis shields because the fluctuation in energy prices broke out about two years ago. It was aimed to alleviate the impact of the increase in electricity and gas prices on households and companies, and for this purpose, measures were implemented, redesigned and expanded until a “safety net” was established against exorbitant increases in electricity. and the gas that will continue through the long election year ahead.
The executive has succeeded in ramping up consumer protection plans that will prevent exorbitant rises in electricity and gas bills of millions of homes and companies through price peaks, tax cuts and direct aid should tensions resurge in the electricity and gas markets. The end of 2023 is a year marked by municipal and regional elections in May and will, in principle, end with the culmination of the general elections in December.
Spain and Portugal have received approval from Brussels to extend the so-called Iberian exemption, a mechanism that sets a cap on the price of gas used in electricity generation, until the end of the year to lower the final price of electricity. The cap, which expires on May 31, aims to ensure that the rest of power generation technologies are unaffected by new gas price hikes that recorded historic highs during the energy crisis.
The manager calculates that due to falling prices in the wholesale electricity market, the mechanism has saved all Spanish consumers more than 5,100 million since it was launched on 15 June. The mechanism has not been implemented for two months because the wholesale gas market price is below the ceiling set by the Iberian exception (65 euros per MWh). However, should the gas markets be stressed again, the Iberian border will act as a lifeline for Spanish and Portuguese consumers.
As part of its initial shock plans to ward off the brunt of the energy crisis, at the end of summer 2021, the government introduced a system of controlling their extraordinary profits to prevent electricity companies from taking advantage of the price hike. increase their income. In practice, the Executive has since set a ceiling price of €67 per megawatt hour (MWh) for nuclear, hydraulic and renewable electricity sales contracts and will maintain this for at least the whole of 2023. Already in a little over a year he had to return for excessive income, which reached 450 million euros.
In parallel, the Executive strengthened the social electricity bonus for vulnerable consumers and temporarily increased electricity bill discounts to 65% and 80% of the total amount (between 25% and 40%) as part of anti-crisis measures. depending on the original degree of vulnerability) and the ban on supply disruption to vulnerable households was also extended.
The government also created an exceptional and temporary new type of social bonus for middle-class homes due to the energy crisis and economic uncertainty caused by the war, giving families a 40% discount on their electricity bill. two adults and two children can earn up to 27,700 euros per year.
Help with gas bill
The government also shielded millions of homes from rising gas bills by capping increases in regulated rates, and also set a €19.55 cap on the maximum price a butane cylinder could reach. To mitigate the impact of the price hike, the manager injects subsidies directly financed with public money, which reduce the bills of customers with regulated gas rates by nearly 40%.
The government launched a million-dollar package of measures last October to limit the increases that can be applied to customers with regulated gas tariffs by the end of 2023 by law, and to create a new type of discount rate for centrally heated homes. its neighboring community.
The government covers the million-dollar deficit in the accounts of the Spanish gas system by these measures with a public budget, assuming the cost of the discount applied to approximately 2.5 million customers (although 5.7 million consumers are excluded from protection with free gas). market rates). OneThe public contribution required to subsidize the regulated gas tariffs is currently just over 500 million. Euro from October to the end of March.