The Government will take this Tuesday to the Council of Ministers a package of measures with which it intends to alleviate the price of electricity that soared six months ago and has already marked 13 of its highest levels in history in the 14 days that have elapsed since September. It is expected that, among other tools, a tax reduction and new obligations for power companies will be considered. However, it might not be enough to fulfill

Pedro Sánchez's

"firm commitment"

that 2021 end with a bill similar to that of 2018.

The Council is expected to approve

three blocks of measures

: fiscal

measures

, a review of the regulated tariff and a third that forces electricity companies to auction energy between marketers and industrialists. According to the government's spokesperson, Isabel Rodríguez, they will allow the receipt to be reduced "by around 12%."

One of the fiscal measures, in fact, is already in place, but it could be prolonged in time and even maintained permanently. The

reduction of VAT from 21% to 10% will

continue, at least, until December, although it has ended up being insufficient in the face of the price escalation. The Popular Party, which registered a bill with its own measures at the beginning of the month, also contemplated consolidating it. The disappearance of the sales tax on energy production, of 7%, will also be extended until December 31.

Likewise, the Tax on Electricity, which is currently 5.11%, will be reduced, as announced by Pedro Sánchez in an interview on TVE: it will become 0.5%. "It does not seem acceptable to me," said the president, that there are companies that are having "extraordinary benefits" derived from the energy crisis. The idea, he assured, is to "detract the extraordinary profits" from these companies and redirect them to cover the electricity and gas bill. "They can afford it," said Sánchez, who estimates that some 650 million euros of non-emitted CO2, and the same amount of gas, will be withdrawn from these companies.

With regard to the rate review, Ribera already opened the door to do so at the end of August. The idea is to somehow undo the link between the price and the wholesale market and return in a way to the system that worked until 2013. In this way, the future price of the energy cost would be linked, with which the invoice would be

more stable

, without such drastic changes from one day to the next.

This would only affect regulated rate customers - that is, the

Voluntary Price for Small Consumer

(PVPC) -, about 10 million people in Spain or about a third of customers. The other two thirds have a fixed rate, which pays a fixed price that is established with a certain periodicity (one or several years). Although it is usually somewhat higher in calm times, avoid these fluctuations. Several electricity companies have announced in recent days a revision of their rates (they are around 60 euros per megawatt hour) precisely to attract PVPC users to the fixed system.

The third measure has already tried to be incorporated - without success - by the Government of

José Luis Rodríguez Zapatero

and is included in the 2013 Electricity Sector Law, which empowers the competent minister to intervene in the price when there is a lack of liquidity or there is no effective competition. It consists of forcing the large electricity companies with relevance in the generation market to sell part of this production in auctions outside the wholesale market, which is the one that is currently setting record prices. Ribera will request the CNMC to design the mechanism and justify its implementation due to lack of competence.

In 2007, the Zapatero government designed this mechanism and

Joan Clos

, then Minister of Industry, ordered Endesa and Iberdrola to auction part of their production between independent electricity marketers and large clients.

However, the companies began a legal battle that ended in the Supreme Court, which proved them right, as they considered that the price set by the ministry was too low, which allowed it to be bought and resold higher.

To prevent this situation from happening again, the Council of Ministers is expected to approve a similar tool, but not to impose prices.

Pay less than in 2018

Based on constant increases, and without ignoring a still very present pandemic, the price of electricity in the wholesale market has gradually become one of the most complex crises for the Executive. Electricity skyrocketed in April and has not stopped increasing since then and August

ended

with an average of

105.94 euros

. The comparison is also hard if 2020 at mid-gas is ignored: June, July and August were 76.5%, 79.6% and 135.63% more expensive than the same months of 2019, respectively.

After two weeks, the average price for September goes up to 142.58 euros, well above the 41.96 euros that electricity cost in the same month in 2020 or 42.11 in 2019. What's more, yes electricity had a cost of 0 euros during the remaining 16 days, the average price would remain at

66.54 euros

, still more than 50% above the previous years.

The trend continues to be upward and, in fact, it is expected to reach its maximum peak in November, when it could reach 125 euros on average, and then it will begin to decline, according to

Víctor Martínez

.

Of course, it will be a very gradual decline that will not soften prices until early 2023.

During the interview on public television, Sánchez clarified on several occasions that the influence of the wholesale price on the electricity bill is not so great and that it is important to distinguish it from the final bill.

Thus, according to the calculations that he mentioned, it only affects 20 or 30%, since the invoice includes various taxes and additional costs that should be lowered to achieve this reduction to the levels of 2018. In any case, the president clarified that this The calculation should be done by discounting the CPI.

According to the criteria of The Trust Project

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