Spain rejects criticism of energy companies over € 3 billion tax
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Spanish economic supremacy has pushed back electricity companies’ challenge to Madrid’s € 3 billion tax on their ‘windfall profits’ as European governments step up efforts to curb soaring energy prices .
In an interview with the Financial Times, Nadia Calviño, the number two in the Spanish government, rejected arguments by energy companies that the tax announced last month jeopardized vital green investments, taxed non-existent profits or violated European law .
Europe’s energy crisis has become the main political problem in Spain and is quickly gaining the attention of other EU leaders. The subject is expected to dominate Monday’s meeting of eurozone finance ministers.
“It is essential that this increase in wholesale prices is not fully passed on to customers and businesses and therefore we must use all possible legal instruments to reduce elements of the energy bill,” said Calviño, whose official post is vice-premier. Economy Minister.
She added that the Spanish tax, most of which has already become law, was “absolutely and fully in line with EU law”.
Officials told the FT that the European Commission is assessing whether government measures responding to price increases comply with EU electricity market and state aid rules.
An EU competition expert said Spain’s windfall profits raid would be assessed to see if it unfairly targeted certain companies and sectors over others, thus breaking the bloc’s rules on windfall. state aid. Brussels will publish its recommendations this month.
Calviño, a former senior EU competition policy official, argued that the crisis shows the bloc must develop a common response to rising energy prices.
The crisis has divided EU governments, with some in northern Europe arguing that rising prices should not be used as an excuse to derail the bloc’s path to net zero emissions by 2050.
But France, which called the EU’s energy pricing system “ridiculous,” announced last week that it would block further increases in gas and electricity prices to consumers. Italy unveiled its own € 3 billion package to ease the price hike on September 23.
Outside the EU, many UK gas suppliers have gone out of business due to price caps.
Further sign of concern over the issue, José Manuel Albares, Spain’s foreign minister, visited Algeria, traditionally the country‘s largest gas supplier, last week to seek assurances that he would maintain the Spain supplied at market prices, despite the closure of a gas pipeline. which passes through Morocco.
Spain is particularly vulnerable to rising energy prices as the tariffs paid by more than a third of households are linked to the spot electricity market, which has soared due to the rise in the price of electricity. gas and, to a lesser extent, carbon exchange rates.
Calviño argued that the tax would lower prices for consumers by pumping the funds into Spain’s energy grid.
She added that this would be linked to corporate profits and would not discourage investment. “When companies made their investment decisions, they weren’t expecting these wholesale prices. They did not expect these CO2 and gas prices, ”she said.
But Spanish power companies have reacted with fury to the Madrid tax. In a letter to the European Commission on September 24, they said the measure was creating “massive distortions, uncertainty and damage.”
Calling on Brussels to investigate, they added that the tax would “jeopardize” the EU’s goals of reducing carbon emissions, violate legislation governing the bloc’s single electricity market and be “likely to violate the bloc’s single electricity market. [EU] conventional requirements relating to investor protection ”.
The government said the tax is on windfall profits for groups that have benefited from rising electricity prices and do not have their own corresponding gas and carbon costs.
The companies argue, however, that windfall profits don’t actually exist, as they have sold much of their output for this year and next in the futures market rather than at higher spot prices.