Energy tariff safeguards and neighborhood subsidies explained

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During the peak of the energy crisis, the government introduced a relief system designed to reduce the regulated gas tariff. This move led to more than a million customers shifting to subsidized tariffs to take advantage of the support. The executive decided to keep the mechanism that places a ceiling on gas rate increases in place at least through mid-2024. TUR stands for a framework in which other protections are eased or removed as part of a social shield updated for 2024.

The system acts to limit, not prevent, price rises, as evidenced this winter when customers observed that value-added tax on gas bills rose from five percent to ten percent. The government reviews last resort prices every three months and announced an average increase of eight point one nine percent for about 2.8 million homes from January first to March thirty-one. Additionally, an increase ranging from five point seventeen percent to seven percent was applied to roughly 6,700 neighborhood communities that rely on central heating and share a common tariff. Some increases were scheduled for the winter period, particularly for times of the highest natural gas consumption used for heating.

A decision from the Ministry of Ecological Transformation outlined new TUR values to be published in the Official State Gazette, prompted by ceiling adjustments and government actions within the anti-crisis packages. The General Government Budgets committee noted an accumulation of debt in the energy sector due to extraordinary measures.

savings on bill

Estimates from the manager show that these measures were designed to control the price of the natural gas bill. Households covered by TUR saved on average between fifty-nine and one hundred three euros per year, depending on consumption and contract type. Small and medium-sized enterprises reduced their costs by two hundred seventy-two euros. The regulated tariff remains for those with annual consumption under fifty thousand kWh, and government reviews occur every three months. Thanks to official aid, beneficiaries now receive a discount.

Regulated rates for retail customers are recalculated quarterly on January first, April first, July first, and October first. An adjustment is applied whenever the price components used in the calculation rise or fall by more than two percent compared to the previous quarter.

Since the early stages of the energy crisis, starting in October 2021, the measure that limits increases to a maximum of fifteen percent of the raw material cost has remained in force through the end of the current year. This limit will be maintained for the next two reviews, on January first and April first, with its effect extended at least through June thirty, two thousand twenty-four.

The Rise of the Neighborhood TOUR

Back in October last year, the government introduced a new last-resort natural gas tariff that could be temporarily applied to communities with centrally heated properties. Since then, approximately six thousand seven hundred neighborhood communities have benefited from the subsidy rate, according to figures compiled by the Ministry.

The neighborhood rate, which uses a different calculation method from the rest of TUR, is expected to rise between five point seventeen percent and seven percent in the upcoming quarter. The exact increase depends on eight distinct contract types and varying maturity. This additional rise comes on top of previously recorded increases ranging from fifteen point eight percent to twenty-two point nine percent in the last quarter of the year, applied to communities with a shared gas tariff for central heating.

The government has arranged a three billion euro loan to cover, with public funds, the gap in gas system accounts. This fund can be expanded if necessary to cap increases in both the regulated rate and neighborhood tariff for individual customers. The ministry, led by Vice President Teresa Ribera, notes that four major gas companies—Naturgy, Iberdrola, Endesa, and TotalEnergies—received a total of six hundred forty-two million euros by last September. These funds were intended to help keep the regulated tariff available to customers and to offset the cost of anti-crisis measures.

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