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Power companies ask EU to step in on Spanish profit claw-back plan
Global Banking & Finance Review®
Company
By Isla Binnie
MADRID (Reuters) – Groups representing some of Europe’s biggest energy companies have asked the European Union to intervene over Spain’s plan to take profits from carbon-free power plants that are deemed to have benefited from a rally linked to fossil fuel, a letter seen by Reuters showed.
Spain says older emissions-free plants have received a profits boost from high power prices in the broader market that has been increased because they are exempt from paying for pollution permits needed to burn fossil fuels such as gas and coal.
It is working on a law to oblige the companies that operate them to make payments to the state to reflect this.
Power prices have soared across Europe as energy deliveries from Russia became less predictable following the major oil and gas supplier’s invasion of its neighbour Ukraine, prompting governments to step in.
Industry groups AELEC, Eurelectric, the European Federation of Energy Traders, Wind Europe and the Global Infrastructure Investor Association objected to Spain’s proposed law in a letter to European Commission officials dated June 20.
“The draft law seriously undermines investment incentives for decarbonised electricity generation,” it said.
Companies are worried about measures governments are taking in other countries including Britain, where Germany’s RWE has said a windfall tax would make it reconsider its investments.
Spain says the money should be reinvested in the electricity system to benefit consumers. It calculates the measure could make available 1.6 billion euros ($1.7 billion) per year.
The industry groups, whose members include Europe’s biggest utility Iberdrola, Denmark’s Orsted and France’s Engie said the Spanish plan ran counter to the European Union’s carbon market structure.
They also said it should exclude energy sold under long-term fixed-price contracts, and does not.
“We urge the Commission to enter in a dialogue with the Spanish Government and to express its concerns over a draft law that is contrary to the EU framework,” the groups said.
The law would cover nuclear and hydroelectric plants and some wind and solar farms built before 2003, when the European Union agreed to create a system of permits for power plants, factories and airlines to cover the planet-warming emissions they produce.
($1 = 0.9451 euros)
(Reporting by Isla Binnie; editing by Barbara Lewis)
Renewable energy refers to energy derived from natural processes that are replenished constantly, such as solar, wind, and hydroelectric power. It is considered more sustainable than fossil fuels.
Carbon permits are allowances that permit the holder to emit a certain amount of carbon dioxide or other greenhouse gases. They are part of regulatory frameworks aimed at reducing overall emissions.
The European Union's carbon market is a trading system that allows companies to buy and sell carbon emission allowances, aiming to reduce greenhouse gas emissions across member states.
Energy pricing refers to the determination of prices for energy commodities, such as electricity and gas, based on supply and demand dynamics, regulatory frameworks, and market conditions.
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