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Spains Government Has Been Chastised For Its Record High Electricity Bills

Consumers in Spain are concerned about record-high electricity rates, while high summer temperatures keep air conditioning and cooling systems running at full capacity.
According to the government, the recent increases in electricity bills are due to rising prices for so-called carbon certificates, which grant corporations the permission to emit carbon dioxide, as well as gas imports that Spain requires to complete its energy mix and the peak power demand during the summer months.
In the latest attempt to keep costs down, MPs were debating whether to uphold the government’s decision last month to reduce the value-added tax on most home electricity bills from 21% to 10% until the end of the year, as well as to eliminate a 7% tax on power generation for at least three months.
The expense of such tax is passed on to customers by utility companies.
Nevertheless, consumer groups claim that the savings from these two measures have already been neutralized by the price hikes that have occurred in both Spain and Portugal, which share the power purchasing market, since the beginning of this year.
According to OMIE, the Iberian Peninsula’s electricity market operator, Wednesday’s megawatt per hour cost residents in both countries an average of 106 euros ($124).
That was the most expensive price in Spain since records began, exceeding the previous high of 103 euros/MWh set in January.
According to Facua, one of Spain’s largest consumer rights organizations, Spaniards would face a 35% increase in their July electricity bill compared to the same month in 2020.
The surge occurs as many families deal with the financial consequences of the coronavirus outbreak.
The fundamental difficulty, according to Facuas Secretary-General Ruben Sanchez, is a rule in the daily auction of power in which the government pays for all the megawatts it buys from different power sources at the highest price of all of them, which is usually electricity generated with gas.
“This encourages speculation and artificially inflated pricing,” he added, adding that power companies nevertheless profited handsomely.
Members of Spain’s left-wing ruling coalition blamed European electricity market restrictions.
“We did all we could by lowering the VAT,” Felix Bonaos, the new minister in charge of the Prime Minister’s Office, stated.
Environment Minister Teresa Ribera said she had written a letter to the EU’s executive branch emphasizing the need to change the bloc’s power market, but cautioned that the upward trend in pricing would likely continue in the coming months.

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