Around March, the electricity bill will rise by 11 percent due to the expiration of several anti-crisis measures that the government had extended through 2024. Households, businesses, and retailers have received this news with considerable uncertainty as costs will increase on March 1. At this time, the executive has not proposed any new law to reduce the price.
Anti-crisis measures in 2024
The Council of Ministers approved a new package of anti-crisis measures aimed at mitigating the impact of inflation and the energy crisis on Spanish households. These provisions were approved at the end of 2023 and had different application timelines throughout 2024. The prime minister, Pedro Sánchez, highlighted that the proposals in the Decree-law form a social shield to protect the most vulnerable families and has stated that the government will keep working so that no one is left behind in this crisis. Among the most important measures are:
Transport
- The free use of Cercanías, Rodalies, regional trains, and state bus lines for regular users is extended.
- The 50 percent discount for Avant travelers is maintained for frequent travelers.
Food
- The 0% VAT on basic foods is maintained.
- VAT on pasta and oil is reduced from 10% to 5%.
Energy
- The VAT reduction on electricity and gas to 10% is extended.
- The electrical and thermal social bonus for vulnerable households remains in place.
Housing
- The suspension of evictions for vulnerable households without housing alternatives is extended.
- The window to apply for rental assistance is enlarged to December 31, 2024.
Employment
- The prohibition on dismissals for objective reasons due to rising energy costs for beneficiary companies is extended.
- ERTEs are extended until December 31, 2024.
Taxes
- Extraordinary taxes on energy companies, banking, and large fortunes are extended.
Other measures
- Cash withdrawal fees at counters for seniors and people with disabilities are removed.
- The prepayment penalty on variable-rate mortgages is eliminated.
The electricity VAT will rise from 10% to 21%
The electricity bill will increase starting in March for many people. The VAT reduction on this essential good depended on not falling below the wholesale market price, which has happened. This 10% to 21% tax rise will affect 27 million contracts under this variable-rate tariff. From Friday, March 1, all bills will be calculated automatically under the new tax regime. No additional legislation or legal changes are required, as this contingency was anticipated when the program began in January.
From that date, bills will show the new tax rate for consumption from March 1 onward. This means some invoices may show 10% VAT until February 29 and 21% VAT from March 1. The government does not plan to intervene to prevent the VAT increase, as explained by the Economy Minister, who stated that energy measures should proceed as planned.
The March change will see some bills reflect the new rate while others continue under the old rate until the cutoff. Overall, the government expects a predictable transition with no new sweeping rules required.
Who benefits in March
Despite that tax rise, some people will see their electricity bills decrease. About 9 million users are enrolled in the regulated tariff, which sets electricity prices fixed by the government and fluctuates hourly with supply and demand. Forecasts indicate that strong wind gusts and rainfall lowered prices for these households. Additionally, the 18 million people with fixed contracts will not experience changes in their electricity bills.