Finally, the government approved an energy reform after long delays caused by a long debate about who will pay what portion a 24 billion euro power tariff deficit. Ministers Soria and Montoro publicly backed the reform, but internal bickering among cabinet members was fed by pressures from power companies and eleven international investment funds that specialize in infrastructure projects and saw their stakes in renewable energy threatened.
In a letter directed to the Prime Minister Rajoy, these funds threatened to withdraw their support from future infrastructure projects. There has been another casualty in this war: the Garoña nuclear power plant closed its doors permanently.
The bill that the Ministry of Industry has drawn up is not finalized, and ultimately a proposed 6% tax on all energy technology will be imposed. This was the cost that renewable energy companies were prepared to take on, clearly benefitting solar and wind plants. With the new law, the government will collect 5.4 billion euros. Power companies will pay for 2.886 billion of this amount.
In turn, the Ministry of Industry has agreed to relax the power tariff this quarter. The reform was necessary, because it cleared up doubts about sector pricing and does away with the tariff deficit, which was a real threat to public accounts. The power companies are paying for the first round, especially the renewable energy companies, but pressure from investment funds is putting overall investment in infrastructure projects at risk
