Spain’s Electricity Sector Can Finally Celebrate A Tariff Surplus

electricity1

The Industry Ministry revealed on Tuesday that the tariff surplus for 2014 will be over €600 million (the result of the last available liquidation, number 14, was a €460 million deficit).

With this good news for Spain’s electricity sector it would seem that at long last the tariff deficit problem has been contained (for example, in 2013 the deficit stood at €4.098 billion).

Nevertheless, Bankinter analysts point out that the temptation to cut tariffs should be avoided and that the funds should be used to pay off the almost €30 billion deficit accumulated by the electricity industry (3% of GDP).

Actually, the Industry Ministry has also suggested including a reduction in electricity tolls in the upcoming tariffs revision for 2016. This could be around 2% in the regulated segment.

ACF analysts believe that with the general elections looming and social awareness increasing, the reduction is likely to become a reality. On the other hand, it is something which the government has been working on for some time.

“The fact there is a tariff surplus would justify the measure, although the reality is that the accumulated sector deficit is still brutal. And it wouldn’t be a bad thing if that were the government’s priority for restructuring the sector,” they explain.

 

 

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.