The European Union's executive outlined plans on Wednesday to raise more than 140 billion euros ($140 billion) to soften the blow to consumers from soaring energy prices by skimming off revenues from electricity generators that do not use expensive gas. The proposals would also make fossil fuel firms share windfall profits, as the bloc grapples with an energy crisis fuelled by Russia's invasion of Ukraine.
Fernando Medina said the recently created "Iberian mechanism", an agreement with the European Union to decouple electricity prices from rising gas prices, already contains a direct transfer of windfalls from non-gas power plants to lower regulated tariffs.
"We are already reducing profits from the electricity sector and transferring them to consumers...and we'll do the same with the gas sector," Medina told a parliamentary committee.
Medina said the 1.4 million households and small businesses that buy natural gas in the liberalized market will soon benefit from the same arrangement, as the government allowed households to move to regulated tariffs and avoid huge price increases from Oct. 1.
He said that the Iberian mechanism between June 15 and Aug. 15 had already lowered tariffs paid by consumers by 150 million euros and predicted savings could reach 500 million euros by year end.
"These 500 million euros won't be on the balance sheets of the companies as unanticipated profits and will be transferred directly to consumers," he said, vowing that neither consumers, nor the state, would pay for the mechanism in the future.
Given the increases already announced by companies in natural gas bills, and assuming all households and small businesses move to regulated tariffs, he also promised savings for consumers of 630 million euros by the end of the year.
Further measures to cut power costs should be have "proportionality, justice and.. be effective", he said.
(Reporting by Sergio Goncalves, Editing by Aislinn Laing and Andrea Ricci)
By Sergio Goncalves