Spain's govt steps in to halt record rise in power prices

MADRID (AP) — Spain’s government is slashing energy taxes as part of a package of measures aimed at driving down household electricity costs, which have surged to record highs in recent months and triggered an outcry.

Prime Minister Pedro Sánchez said his government wants to curtail what he called energy companies’ “exceptional benefits” under current fiscal and energy regulations.

The goal is to shift fiscal benefits to consumers and also head off a potential sharp increase in natural gas prices, Sánchez told public broadcaster RTVE in an interview late Monday.

The government says the hikes in electricity bills are driven by spiraling prices of so-called carbon certificates, which give companies the right to release carbon dioxide; gas imports that Spain needs to complete its energy mix; and surging power demand in recent months.

Wholesale electricity prices are more than 250% higher than one year ago, according to private Spanish news agency Europa Press.

Surging domestic prices are also an issue in other European countries, with Spain’s environment minister recently sending a letter to the European Union’s executive branch stressing the need to reform the bloc’s electricity market.

The galloping prices increases have brought public anger and pressure on the government from consumer associations.

Sánchez said that among other measures his government intends to scrap a 7% tax on power generation. Utility companies pass on the cost of that tax to their customers. A separate energy tax is to be cut to 0.5% from 5.1%

Further details are due to be announced after a Cabinet meeting Tuesday.

The measures drove down the share prices of energy companies on the Madrid stock exchange Tuesday. Shares in Endesa, Spain’s biggest energy company, fell by 1.7% in early trading.