Major electric companies in Spain have unleashed a legal battle to combat the effects that power sector reforms have had on their balance sheets. The proof is in the earnings results that these companies have unveiled over the past several days, which show that profits are way down.
For the government, the situation is complex. With a 30 billion euro tariff deficit, it seems easy to find solutions that everyone is comfortable with. Despite the fact that the new reform laws are a step in the right direction, the problems are far from over. For example, the deficit increased by 2 billion from January to March. With this happening, it makes sense that the government and the European Commission are focusing on tariff deficits. The Ministry of Industry has had to take responsibility for overhauling the sector. Logically, the reforms put electric companies in a tough spot, especially the ones who are heavily invested throughout the sector and could lose significant cash. Even though Industry changed the rules of the game at halftime, they had their reasons.
Faced with this situation, they have decided to go big. After two court rulings that went against their interests, the power companies have decided to join forces and appear before the courts to defend themselves against the Ministry of Industry's changes. Unesa will lead the group. Also, smaller electric companies and renewable energy companies will tag along. The companies believe they have a legitimate claim that the Ministry of Industry has acted against their legal interests. Whatever happens in this battle will determine the sector's future. The law might have to change again, but this decision will be in the hands of the judges.
