In 2021, a government bill aimed to modify electricity system costs with the promise of permanently lowering bills. The tradeoff involved a potential rise in fuel and natural gas prices. The energy crisis pushed prices to historic highs, and the bill’s passage stalled in parliament in 2022 to avoid adding more pressure on fuel and natural gas costs.
The executive branch has not abandoned the law and defends its objectives, but at present there is no plan to revive the process. There is uncertainty about future energy prices, and officials indicate it is not yet the moment to act. Teresa Ribera, the vice president and minister for the Ecological Transition, noted at a Nueva Economía briefing that the timing is unclear, but the issue will need attention eventually.
The rule is effectively kept in reserve within the National Fund for the Sustainability of the Electricity System (FNSSE). The intent was to shift part of the charge for regulated renewables away from the electricity bill and onto oil and gas companies, aligning with the goal of relieving households of full transition costs while spreading some burden to fuel producers.
Who pays for regulated renewable energy sources?
As of the current year, the cost of regulated renewable energy remains embedded in the electricity bill, totaling roughly 4.5 billion euros. The original aim of the green fund was to reduce this burden on consumers by shifting portions of the charge to oil and gas companies. Monetary impact would thus be redistributed, lowering the electricity bill somewhat while revealing a corresponding adjustment in fuel and natural gas charges. [Cita: Gobierno]
Ribera approves substantial investments by electricity companies but seeks to avoid electricity hikes
Various parliamentary attempts to advance the law occurred amid energy market fluctuations and the United States government measures aimed at shielding households and businesses from sharp fuel and gas price increases. The administration judged that transferring new costs to energy users during a period of price controls would be counterproductive and would strain public finances.
Ribera explained that the timing coincided with the Ukraine conflict and a surge in international gas prices, stressing consumer protection as a priority. [Cita: Ministerio de Transición Ecológica]
At the time, government estimates suggested the FNSSE would shield the electricity system from about 663 million euros in costs that would otherwise fall to the state and then to oil and gas companies who would pass them on to customers. A separate bill aimed at reducing revenue from carbon emissions from non-emitted sources, including nuclear, hydro, and wind, was approved and later paused. The combined effect would be to prevent about 1,140 million euros from appearing on the electricity bill. [Cita: Finanzas Públicas]
Complaints from major industry
The creation of the renewable fund sparked strong opposition from major industry groups. A group of a dozen associations representing different sectors warned that implementing the FNSSE could impose a multibillion-dollar burden on industry during the energy crisis. They urged the government and opposition parties to halt the rule to avoid transferring renewable energy costs to gas and fuels, which could affect competitiveness.
Shippers and manufacturers in the automotive, oil and refining, paper, chemical, food and drink, cement, mineral raw materials, and steel sectors joined forces to demand a pause in the rule until the financial impact on industrial companies could be assessed.
Government ends electricity company cuts and does not extend maximum electricity contract prices
Industry welcomed the partial exclusion of renewable energy costs from the electricity bill but warned that drawbacks must not undermine industrial competitiveness. Business groups proposed moving the remaining regulated renewable energy fee entirely to the general budget, where the government would bear the guaranteed cost for green facilities as a public responsibility. Budget projections reflected the desire to stabilize costs without compromising industry.