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Government to debate a shock plan as Spain’s wholesale electricity price hits a new high

The average daily price of wholesale  electricity will break a new record this Thursday (9 September)
The average daily price of wholesale electricity will break a new record this Thursday (9 September) / SUR
  • Proposals, which could include a cut in the energy tax and other measures, will go before a Cabinet meeting next week

A shock plan that the Spanish government has prepared to try and contain the rise in wholesale electricity prices will be discussed by the Cabinet next Tuesday, 13 September, sources have confirmed to SUR.

Ministries have accelerated their work in recent days as the price for generating electricity continues to climb, reaching historic highs.

The average daily price of electricity will break a new record this Thursday (9 September), reaching 141.71 euros per megawatt hour (MWh), its highest price in history and 4.4 per cent higher than that registered this Wednesday (135.65 euros).

The Government is considering plans to reduce "to a minimum" the special Electricity Tax, which currently levies 5.11 per cent on consumer bills. This has been suggested by, Nadia Calviño, who has served as the First Deputy Prime Minister of Spain since July 2021 and as Minister of Economy since 2018 under prime minister Pedro Sánchez.

She has indicated that "taxes is one of the changes we are looking at" to ensure that the average amount of the electricity bill for this year is similar to that of 2018, following the commitment announced by Sánchez a few days ago.

The special Electricity Tax, which is also monitored by the European Commission, is set at 5 per cent but could decrease. It generates an income for the State of about 1.2 billion euros per year and, in addition, it is collected for the region, for which they would have to be compensated by Madrid.

This possible reduction would be added to the drop in IVA sales tax from 21 to 10 per cent, that has been in force since last June.

The Minister of Social Security, José Luis Escrivá, has defended the impact of the current electricity prices in the wholesale market will be "reasonably limited" on the bills of most consumers, although they will have greater impact on those that have the regulated tariff (PVPC).

Escrivá has insisted that the prices in the wholesale market go through "many filters" and he expects a "limited effect" on what the customers pay on their electricity bill. “There will an impact, a small one, and it will definitely not be double.”