Tariff deficit bond payments are famous for their recent scarcity. The Minister of Industry, José Manuel Soria, has halted this mechanism until all measures associated with energy reform can be accounted for. This is expected to happen at the first of next month.
Sources from the energy sector explained to elEconomista that the Cabinet has ordered a full halt of payment issues carried out through the Tariff Deficit Amortization Fund (Fade following the Spanish acronym) despite the fact that doing so means that the Ministry will not meet its goal of placing 7 billion euros in pending securitizations that it should have financed before next July, according to a report on the process.
Therefore, similar to what happened last year, the Spanish government will have to prepare another order to extend the time frame that power companies can pay off their tariff debts, which they are debiting to consumers because the tariffs aren't covering the real costs of power production considering that in the next two months it is likely that the power companies won't be able to place the 7 billion euros in remaining tariff credits.
The power companies, at the same time, will have to prepare a document that extends the term of the temporary stoppage of their right to collect on debt. Further, this deferral is also a consequence of plans that the Cabinet has for facing the snowball that financial adjustments is causing in Spain. Soria could be speaking with the Minister of the Economy about modifying the mechanism used to issue tariff debt, which is currently being sold at excessively high interest rates that characterize the last few issues, even private ones.
