14/07/2013 00:00
TW
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Madrid/Palma.—The government announced yesterday higher electricity bills and cuts in public aid to plug a huge deficit built up by state subsidies aimed at keeping prices in check. “This is the definitive reform to resolve our country's electricity sector problems,” Deputy Prime Minister Soraya Saenz de Santamaria told a news conference after ministers met to approve the change. “With this major structural reform, the aim is to correct a key imbalance in the economy,” she said.
Spain's electricity sector has built up a deficit of 26 billion euros since 2005, the difference between production costs and the tariffs, some of which are government controlled.

Each year, the hole grows by another four billion euros.
Prime Minister Mariano Rajoy's centre right government decided to share the costs of the reform.
It cut subsidies to energy companies and networks by 2.7 billion euros a year while pushing up consumers' bills by 900 million euros and contributing another 900 million euros from the state treasury. “If we had done nothing, the two other alternatives in terms of energy were the collapse of the system or increasing the price for consumers by more than 40 percent,” said Industry Minister Jose Manuel Soria.

Electricity bills should go up by 3.2 percent in the next weeks, the minister said, unwelcome news for Spaniards suffering from a recession with an unemployment rate of more than 27 percent.