Government still aiming to eliminate electricity “tariff deficit”

The government is maintaining as a “priority” this year the elimination of the so-called tariff deficit, the difference between what it costs to generate power and what can charged in rates regulated by the government, Industry, Energy and Tourism Minister José Manuel Soria said Wednesday.

The deficit rose 14.1 percent last year to 4.072 billion euros despite a fall in distribution costs, compared with a target of 1.5 billion. The main reason for the blowout was the premium paid to producers of renewable energy, which in the first 11 months of last year climbed 22.6 percent to 8.012 billion.

Soria said his department adopted measures to rein in the deficit last year. The government withdrew premiums for new renewable projects at the start of 2012.

The minister noted that the National Energy Commission (CNE) estimates the amount of premiums to be paid to alternative energy producers this year at about nine billion euros. Soria said his department is working to resolve the problem. However, he said the idea of reducing premiums paid to thermosolar energy producers is not on the table.

He said he is open to the introduction of fracking in Spain to extract non-conventional hydrocarbon reserves, provided environmental issues involved in the technique are respected.