Spain targets energy firms as European bills surge

Spain's left-wing government has agreed emergency measures to cut spiralling energy bills as electricity prices climb to record levels.

It aims to channel €2.6bn (£1.9bn; $3bn) in energy company profits to consumers and slash electricity taxes over the winter months.

Energy bills are climbing across Europe as gas prices soar in particular.

Greece is promising subsidies to consumers and Italy is also aiming to review electricity bills.

But it was Spain that moved first on Tuesday. It has seen some of the highest energy prices in Europe in recent weeks, prompting protests over the summer in a number of cities.

Wholesale electricity prices rose during the summer months and have continued to climb, with reports of a record high of €172.8 per megawatt hour for Wednesday, 12.6% up on Tuesday.

Socialist Prime Minister Pedro Sánchez promised Spaniards that under his "shock plan" they would pay no more for their electricity than they did in 2018 plus inflation:

The plan to target utility firms hit shares in Endesa in particular, which slumped 5.1% on Tuesday.

Poland is facing some of the biggest increases in energy bills, as it not only has to deal with rising gas prices but hikes in the price of CO2 permits under the EU's emissions trading scheme too, because of its heavy reliance on coal.

Under the system, companies receive or buy emissions allowances and then trade them.

The EU carbon price is currently trading at around €61 per tonne and is also partly behind the surge in Spanish electricity costs. "Only about one fifth of the price increase can be attributed to CO2 prices rising," said Frans Timmermans, the European Commission's vice-president in charge of climate issues.

He was addressing the European Parliament during a debate on EU plans to cut emissions by at least 55% by 2030. Polish MP Anna Zalewska warned that citizens would "unfortunately pay for the ambitions of the EU".

Last week, the UK's energy regulator warned that the soaring cost of fossil fuels would feed into customers' energy bills.

Italian minister Robert Cingolani warned on Monday that electricity bills were likely to go up by 40% in the coming quarter, after a 9.9% increase in the last one. "We have to face these things," he said, blaming the increase on the cost of both natural gas and CO2.

Italy has already injected €1.2bn into the system over the summer to reduce bills but is now considering a complete overhaul of the billing system, possibly transferring the cost of supporting renewable energy to general taxation.

In Greece, Energy Minister Kostas Skrekas said the government was planning to offer energy subsidies to the majority of households.

A one-off payment is being considered for low-income households, as well as a €9 monthly subsidy for the first 300 kilowatt hours used by 70% of the population.

The French government, facing a presidential election in the spring, has acknowledged that millions of consumers have been affected by price rises.

Energy grants already benefit six million people to an average of €150 a year and Economy Minister Bruno Le Maire is considering whether the scheme should be extended.