Minister speaks out against reform plans for electricity sector

Spanish Finance Minister Cristóbal Montoro has taken exception to plans by Industry Minister José Manuel Soria to introduce special taxes on renewable energy producers to help cut the so-called tariff deficit.

The tariff deficit is the difference between what it costs to produce electricity and regulated rates charged to consumers. The shortfall currently amounts to 24 billion euros.

In an interview with Bloomberg published Tuesday, Montoro said Soria's reform of the electricity sector was discriminatory and would create legal problems. "We have been opposed to it from the start," the minister said.

Montoro also objected to Soria's department floating the idea of introducing a green tax on the consumption of natural gas. "They decided to air this idea with the media, but I have the last word when it comes to creating taxes," he said in the telephone interview, which was conducted on August 16.

"Until I decide, this isn't going forward, whoever announces it," the minister said. "Nothing has been decided."

Montoro said the government's priority was to reduce the public deficit, not the tariff deficit. He said the latter was "not going to be decisive when it comes to resolving the funding of the Spanish economy. "We shouldn't allow ourselves to be distracted by this nor by different opinions within the government. We have to guarantee that we meet the public deficit reduction target in the short run."

A reform of the electricity sector is one of the conditions imposed by Brussels in exchange for a bailout of up to 100 billion euros to help the Spanish banking system recapitalize.

The reform proposed by the Industry Ministry includes a general tax on traditional sources of power such as nuclear, hydroelectric and combined cycle, an 11-percent levy on wind-power producers, and 19 percent on solar-power producers.