Spain rejects criticism from energy companies over €3bn levy
Europe’s energy crisis has become the main political issue in Spain and divided EU governments
Spain’s economics supremo has pushed back against electricity companies’ challenge to Madrid’s €3bn levy on their “windfall profits”, as European governments step up efforts to rein in soaring energy prices.
In an interview with the Financial Times, Nadia Calviño, the number two in the Spanish government, dismissed energy companies’ arguments that the levy announced last month jeopardised vital green investments, taxed non-existent profits or broke EU law.
Europe’s energy crisis has become the main political issue in Spain and is rapidly getting the attention of other EU leaders. The topic is set to dominate Monday’s gathering of eurozone finance ministers.
“It is essential that this increase in wholesale prices is not fully passed on to the customers and to the companies and therefore we must use all possible legal instruments to reduce the elements of the energy bill,” said Calviño, whose formal position is deputy prime minister for the economy.
She added that the Spanish levy, most of which has already become law, was “absolutely and fully compliant with EU legislation”.
Officials told the FT that the European Commission was assessing whether government measures responding to the price rises were in line with EU electricity market and state-aid rules.
One EU competition expert said Spain’s windfall profits raid would be assessed to see if it unfairly targeted some companies and sectors over others, thus falling foul of the bloc’s state-aid rules. Brussels will publish its recommendations this month.
Calviño, a former senior EU competition policy official, argued that the crisis showed that the bloc had to develop a common response to the rise in 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 has described the EU’s energy pricing system as “ludicrous”, announced last week that it would block further rises to consumers’ gas and electricity prices. Italy unveiled its own €3bn package to mitigate the price rises on September 23.
Outside the EU, numerous gas providers in the UK have gone out of business because of price caps.
In a further sign of concern about the issue, José Manuel Albares, Spain’s foreign minister, travelled last week to Algeria, traditionally the country's biggest gas provider, to obtain assurances that it would keep Spain supplied at market prices, despite the closure of a pipeline that runs via Morocco.
Spain is particularly vulnerable to the energy price rise because tariffs paid by more than a third of households are linked to the spot electricity market, which has soared because of the rising cost of gas, and to a lesser extent, carbon trading rates.
Calviño argued that the levy would reduce prices for consumers by ploughing the funds into Spain’s energy grid.
She added that it would be related to companies’ profits and would not deter investment. “When companies made their investment decisions they were not expecting these wholesale prices. They were not expecting these CO2 prices and gas prices,” she said.
But Spain’s electricity companies have responded furiously to Madrid’s levy. In a letter to the European Commission on September 24, they said that the measure created “massive distortions, uncertainty and damages”.
Calling for Brussels to investigate, they added that the levy would “jeopardise” EU objectives to cut carbon emissions, violated legislation governing the bloc’s single electricity market, and was “likely to infringe the [EU] treaty requirements relating to investor protection”.
The government has said the levy is on windfall profits of groups that have benefited from the rise in electricity prices and do not have corresponding gas and carbon costs of their own.
The companies, however, argue that the windfall profits do not in fact exist, since they have sold much of their production for this year and next on the forward market rather than at higher spot prices.