Q&A-Tackling Spain's power tariff deficit

Tue Oct 26, 2010 5:11pm GMT
 

MADRID Oct 26 (Reuters) - Spanish power groups could breathe a sigh of relief before the end of the year if the first stage of a plan to take 14.6 billion euros ($20.4 billion) of government-backed debt known as the tariff deficit off their balance sheets goes according to plan. [ID:nLDE69P259]

Following are some facts on the tariff deficit:

WHAT IS IT?

The accumulated difference between generating, distributing and supplying electricity for regulated markets and the tariffs for those markets fixed by the government since 2001.

The deficit covers unprofitable business areas such as supplying islands with electricity and more recently, Spain's huge renewable energy rollout.

Spain has promised to eliminate the shortfall between consumer prices and generation costs by 2013 through a combination of further deregulation, reduced subsidies for renewable energy and higher tariffs for consumers. It has also considered a windfall tax on cheap power from nuclear and large hydro electric plants.

TO WHOM IS IT OWED?

Heavily indebted Italian utility Enel's (ENEI.MI: Quote) Spanish unit Endesa (ELE.MC: Quote) has the highest proportion of the deficit, 7.7 billion euros, or 53 percent of the total.   Continued...

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