Spain’s government approved emergency measures on Tuesday to help households pay for the spiraling cost of electricity, and promised to cap profits made by electricity companies as a result of the recent jump in the price of natural gas.
Wholesale prices for natural gas across Europe have soared to levels almost five times where they were in 2019. The rising price is causing electric bills to jump, because gas is often used to generate electricity. Some other European governments have also recently outlined plans to help consumers, including Greece, where the government is setting up a fund to subsidize the electricity bills paid by households.
In Spain, the steep rise has become a political problem. Pedro Sánchez, the Socialist prime minister, leads a minority left-wing coalition government that relies on support from Unidas Podemos, a party committed to protecting the most vulnerable households. The package of emergency measures would, among other things, protect poorer families that cannot pay their bills by extending the grace period before utilities can cut off their power.
The government’s action was announced after Mr. Sánchez outlined his plans in a television interview on Monday night. Without providing details, he said about 650 million euros (about $770 million) of “extraordinary profits” would be taken from energy companies and “redirected to consumers.”
Some welcomed the government’s decision. “No Spanish government had ever dared to take on the energy companies that control our market as an oligopoly, so I consider this to be historic, but obviously it’s going to create a lot of anger in these companies,” said Javier García Breva, a former Spanish lawmaker and an expert on renewable energy.
But an opposition politician from the Ciudadanos party, Edmundo Bal, said Mr. Sánchez was hurriedly applying a “patch” on the energy problem, rather than seeking a long-term solution.
Electric companies said the moves would be counterproductive. Natural gas prices have risen across Europe because of a variety of factors, including a resurgence of global demand after pandemic lockdowns and a late-winter cold snap that drained storage levels.
Iberdrola, one of Spain’s three main electric companies, said energy prices were rising because of “international factors” and would not be restrained by the government’s action. The association representing Spain’s nuclear power producers threatened to suspend operations in response.
Mr. Sánchez pledged to reduce electric rates paid by consumers to the level of 2018, excluding inflation. The measures approved Tuesday include a cut on the electricity generation tax, which is paid by consumers, until the end of this year. In June, the government reduced the value-added tax paid on electric bills to 10 percent from 21 percent.
The latest data from the national statistics office shows that Spaniards last month paid about 35 percent more than a year earlier for their electricity, while the wholesale price of electricity has continued to climb in recent weeks.
Teresa Ribera, Spain’s minister for ecological transition, told reporters that the emergency measures would help reduce the monthly electricity bill paid by households by 22 percent.
To achieve this goal, the government will cap profits made by energy companies from the worldwide rise in natural gas prices until at least March, when the situation will be reviewed.
“The forecast for the coming months points to a spiral without precedent,” Ms. Ribera said, which in turn “impacts the well-being of families and the whole of the Spanish economy.”