Royal Decree to alleviate the COVID-19 crisis in energy

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Royal Decree to alleviate the COVID-19 crisis in energy

On Tuesday 31 March 2020, the Council of Ministers approved a new package of economic and social measures to complement and reinforce the measures adopted by the government over the last three weeks to minimise and counteract the impact of COVID-19.

For the energy sector, they will benefit electricity and gas suppliers as well as consumers.

For vulnerable consumers

The measures approved within a package of 50 allow:

  • Extension of the prohibition of cuts in the supply of electricity, gas and water to all households during the period of the alarm state, except for reasons related to security of supply. In a context in which, due to a longer stay in the home derived from containment measures, and the development in it of professional activities that are normally carried out outside the habitual residence measures are established to guarantee the continuity of household energy and water supplies.
  • Exceptionally and temporarily, the right to benefit from the social electricity bonus is extended to workers affected by layoffs and to the self-employed who have ceased their activity or reduced their turnover due to the coronavirus crisis. Specifically, the group of potential recipients should have an income equal to or less than certain thresholds referenced to the IPREM. They need to prove prove to the reference supplier that they are affected by employment regulation measures adopted by their companies, have ceased their professional activity as self-employed professionals or have seen their turnover reduced by 75 percent on average compared to the previous semester.

    The measure, advanced by the head of Ecological Transition, Teresa Ribera, establishes income ranges:

    • or 2.5 times the Public Indicator of Multiple Effects Income (IPREM) of 14 payments, in the event that the owner of the supply point is not part of a family unit or there is no minor in the family unit;
    • or 3 times the IPREM index of 14 payments, in the event that there is a minor in the family unit;
    • or 3.5 times the IPREM index of 14 payments, in the event that there are two minors in the family unit.

    The condition of vulnerable consumer defined in the previous sections and, therefore, the right to receive the social bonus in the corresponding terms, will expire when the circumstances referred to no longer exist, the consumer being obliged to communicate this fact to the reference supllier.
    In no case will the consideration of a vulnerable consumer due to compliance with the preceding paragraphs extend more than 6 months from its accrual.

For self-employed consumers and companies

Following the council meeting, the government will allow the deferral of all electricity and gas payments. The self-employed and the companies affected by the COVID-19 can make the payment of basic supplies such as electricity, water or gas more flexible, even reaching the possibility of suspending their payment. The amounts owed will be paid within a maximum of six months after the end of the alarm state. In the same way, the government will force to grant the reduction of power capacity of its invoices without charging for it. In this way, in order to face the current crisis, SMEs and the self-employed will be able to see a reduction in their receipts.

Likewise, self-employed and companies will also be allowed to temporarily turn down their supply contracts, or modify the modality of their contracts without any implicit penalty. Likewise, a change in tariff and adjustment up or down of the power capacity contracted will also be made available to them at no cost. Once the alarm status is over, they will be allowed a new modification without cost or penalty.

For suppliers and distribution companies

Changes in contracts will not involve expenses. In order that thoses costs do not fall on the suppliers or the distributor, and they do not have to assume heavy treasury charges, they will be exempt from paying tolls during the period of suspension of payment. Nor should they pay the taxes associated with bills for electricity, gas and oil derivatives.

All these measures can be maintained for up to three months after the alarm state is lifted.

Emphasize that the potential reduction in billing due to less tolls will mean a decrease in revenues for the electricity and gas system. For this, the Government intends to cover the potential deficit from new general state budgets. This new item of the Ministry for the Ecological Transition budget the will go directly to the CNMC, who will have the resources to pay the system’s liquidations (payment to distributors, transporters, extrapeninsular, renewable premiums and historical debt).

Marta Merodio | Energy Consultant

By | 2020-04-01T12:31:05+00:00 April 1st, 2020|Categories: Electricity Markets, Energy Policies, Featured, Gas, M·Blog, Spain|Tags: , , |Comments Off on Royal Decree to alleviate the COVID-19 crisis in energy