Spain plans measures to cut soaring energy bills as electricity rates hit record levels

With soaring gas prices, Europe is witnessing surge in energy bills. To deal with the situation, Spain has undertaken emergency plans to cut skyrocketing electricity bills in the country. As per BBC reports, Spain has recently seen a record rise of €172.8 per megawatt-hour, 12.6 per cent up on Tuesday on wholesale electricity prices. The step has been undertaken in view of several protests across Spanish cities throughout summer against hike in energy bills.

Looking at the ongoing demonstrations, Spain's left-wing government led by Prime Minister Pedro Sanchez has promised to slash electricity taxes to lower the ballooning. Lawmakers have decided to channel €2.6 billion (£1.9 bn, $3bn) energy company profits to enable tax reduction over the coming winter months. It has strategised a "shock plan" to control the electricity prices. Additionally, the government also stated that they would not pay more than what they did in 2018 (plus inflation.)

The contingency "shock" plan

Following the reduction in VAT bills in July, now Spain has temporarily reduced electricity taxes from 5.1 per cent  to 0.5  per cent  under European Union (EU) rules. Gains from the energy sector will be channeled for customer service and building infrastructure until coming April. Spain will also raise funds by selling carbon emissions worth €900 million. Moreover, Price caps will be set on natural gas mean bills for households, which means the household gas expenses will go up by 4.4 per cent instead of the presumed 28 per cent.

EU plans to cut emissions at least by 55 per cent by 2030

The EU carbon is currently priced at €61 per tonne. The price hike is partially due to the increase in carbon dioxide prices and rising electricity costs in Spain, the European Commission VP in charge of Climate Change issues, Frans Timmermans told BBC. The current inflation of gas and electricity prices has been observed due to EU plans to cut emissions at least by 55 per cent by 2030.

The ambitious plan has plunged the European Union member countries to suffer electricity and gas price inflation. Italian Minister Robert Cingolani predicted that the electricity consumption bills could shoot up by 40 per cent in the coming quarter. Polish MP Anna Zalewska was profoundly alarmed by the EU plans and indicated that citizens will have to "pay for the ambitions of the EU." Meanwhile, Greece and France have also decided to offer subsidies to low-income households to lower the outrageous effect of the price hike on its citizens.

Image: AP