Spain power reforms to cost energy corporations Eur2.7 billion
Spain cut the revenue for renewable energy corporations and operators of electric grid. The move was in accordance to Prime Minister Mariano Rajoy's effort to get rid of Eur4.5 billion deficit estimate for the industry.
Jose Manuel Soria, Spain's Industry Minister, said that the measures would cost utilities approximately Eur2.7 billion. It would also cost Eur900 million for the consumers. The state would absorb an additional Eur900 million of costs. The changes would transpire tomorrow.
Rajoy was working to reduce a debt owed to utilities that blown up to Eur26 billion. The action was in line with the government that forced power generators to provide electricity to customers with a price lower than production cost.
Spanish utilities headed by Iberdrola SA and Endesa SA collapsed along with Acciona SA. Acciona owned greater than 4 gigawatts of wind farms in the country.
"The measures in this reform aren't easy for anyone, but they're absolutely necessary," Soria stated at a press conference held in Madrid. "If we did nothing, the only two alternatives would either be bankruptcy of the system or an increase of the price to consumers of more than 40 percent."