The CNE (Comision Nacional de Energia, or National Energy Commission) wants to put the price of domestic electricity up by 31% as from January 09.
This proposal has been met with cries of horror by the politicians. Not to mention us poor buggers who have to pay for it.
The problem stems from the fact that the electric companies (Endesa, Iberdrola, etc) are generating electric for more than they are allowed to sell it for. The deficit is made up by subsideries from the government. Since the government doesn’t want to keep paying this huge difference annually to the electric companies, they asked the CNE to work out a way to bring production costs and sale price to the same levels. The obvious way is a whopping great big increase, which the politicians don’t really want – or make the electric companies more efficient, which the electric companies don’t really want, as it cuts into their vast, vast, vast, VAST profits (€6,801,000,000 between January and September 2008 [source]).
As I closed the browser and can’t be bothered finding it again, I don’t have the exact figures at hand, but if I remember correctly, for the 4th quater 2008 the CNE wanted to put the electric price up by 15% – the government kept it the same. Last quater, 11.8% proposed increase – 3.5% real increase. Etc.
So, we are now at a position where our taxes are paying for the energy deficit. I would prefer that the government drops the energy deficit subsidery, and allows the electric companies to hike up the price, as in the long run I reckon we’re paying more in taxes than in electric. But judging from the reaction of the Energy Minister to the proposal (along the lines of “Oh god, no! No! NONONO!!!!!”) I imagine the price will have a little hike and we will keep paying more through taxes than through direct prices. Ah well.