The European Commission has reprimanded Spain for applying tough "retroactive" cutbacks to renewable energy companies as well as taxing private investment in these technologies.
This doesn't mean that Brussels thinks that Spain should stop focusing on energy sector reforms altogether, because it backs the nation's attempts to cut the annual deficit and, by extension, the tariff deficit. Instead, the EU disagrees with applying the cutbacks retroactively, because doing this threatens investment in renewable energy technologies and undermines the trust companies have in Spanish law. Sure, we need to cut the tariff deficit, and doing this will require deep changes to how the Spanish energy sector is structured and nixing subsidies, but the reforms should apply to the future and not look back to yesteryear -- or last month for that matter. The EU thinks that the latest renewable energy reforms are illegal because they will affect past events.
This could fatten the deficit in two ways. First, compensating the affected companies. Second, possible sanctions against Spain from EU leaders. The government should have assessed these repercussions ahead of time.
