The government handed two bills more than a year ago, signaling major shifts in the costs carried by the electricity system. These measures propose lowering the overall electricity bill by moving parts of the cost onto oil and gas companies, while also adjusting how revenues from large power plants are distributed. Since their introduction, the parliamentary process has faced repeated pauses and turmoil, leaving the reforms in a state of paralysis for the moment. Still, officials suggest that momentum could resume soon, with a view toward finalizing changes next year.
One bill envisions creating a new National Fund for the Sustainability of the Electricity System (FNSSE). Its aim is to stop the electricity bill from bearing the full cost of a renewable energy charge and to partially shift that burden onto oil and gas companies. The other proposal would trim revenues for large nuclear and hydroelectric plants and reduce the CO2 costs not emitted by wind and solar projects.
The government revived the parliamentary timetable for both projects in mid June so the Parliamentary Ecological Transition Committee could swiftly approve the regulations and forward them to the Senate for final approval. By the end of June, however, votes were delayed again. The measures were refrozen to avoid undermining anti crisis actions that had been taken to lower fuel and gas prices, especially during times of sharp price volatility.
How will the newly arranged electricity tariff work?
In documents accompanying the General Government Budgets for 2023, the state outlines how the financial structure of the electricity system could shift as the two bills move through the Cortes Generales. The plan centers on the creation of the FNSSE and a partial reduction of the CO2 cost not emitted from the electricity sector, with anticipated changes to take effect over the next fiscal year.
Officials describe the changes as a broader overhaul of how financing supports the electricity system. The regulatory adjustments are expected to lower the portion of the electricity bill that has historically absorbed most costs, easing the burden on consumers. The government cautions that implementing the reforms will require corresponding changes to financing mechanisms across the sector.
At present, the annual cost tied to renewable energy under the old framework sits around 7,000 million euros and is fully reflected in the electricity bill. The proposed Fund for the Sustainability of the Electricity System would share this cost with oil and gas companies, reducing the immediate load on electricity customers.
As part of the plan, some of the previously implicit costs would be shifted to fuel and gas bills. The government has also discussed extraordinary measures to reduce fuel costs, including a discount on fuel and a temporary halt to regulated gas rate increases, alongside a VAT reduction.
Estimations considered when evaluating the bills suggest the implementation of the FNSSE could place a 663 million euro burden on the electricity system this year, to be transferred to oil and gas companies. The revenue reductions for electricity companies due to CO2 not arising from nuclear, hydroelectric, and renewable energy would translate into a 483 million euro injection into the electricity system accounts. In total, about 1.14 billion euros would stop appearing as extra charges on electricity bills within a year.
1.1 billion
The 2023 General Government Budget project includes an 1,100 million euro injection, sourced from CO2 emission rights auctions, to finance electricity system costs. The executive argues this figure aligns with the ceiling already included in state budgets for the year.
Finance officials have not ruled out increasing this transfer if auction proceeds exceed the baseline. If revenues surpass the 1,100 million mark, the government may issue credits to reach the total amount raised from the auctions, via an order from the Minister of Finance.