The government approves the measure, which will be in effect until the end of the year and which will finally include neighboring communities
From October 1, private consumers’ gas bills will have to pay 5% VAT (Value Added Tax), compared to the 21% they paid so far. This will be the case after the Council of Ministers approves the measure announced by Prime Minister Pedro Sánchez in the state of the nation debate in July. But the reduction to the possible legal minimum of this tax is born with the doubt whether users will finally notice. Because the gas price remains at a very high level, and any increase can eat up the measure and go unnoticed by households, as has happened with the electricity bill.
The decree-law approved by the government on Tuesday contains several novelties. The first is that the reduced VAT will apply to natural gas supplies, but also to stoves using pellets, briquettes and firewood. And especially the neighborhood communities that use central heating, following this group’s claims to be included in the measure due to the expected increase in their bills. The estimated savings for consumers of approximately 210 million euros.
An average gas bill of 100 euros per month will amount to approximately 86.80 euros when the VAT measure is applied, foreseeable from October and in any case until December. That means an average saving of about 13.20 euros per month.
The VAT reduction from 21% to 5%, the minimum rate allowed by Community legislation, benefits all natural gas supplies, including those destined for boilers from neighboring communities. Until December 31, 2022, the reduced rate will apply to supplies, imports and intra-Community acquisitions of natural gas, facilitating access to this basic supply before the arrival of winter and achieving an estimated savings of 190 million for consumers.
The tax reduction will also apply to pellets, briquettes and firewood, ecological substitutes for natural gas from biomass and intended for heating systems, whose prices have risen significantly with the approach of winter. It will save consumers an estimated $19.4 million.
The VAT cut on natural gas and other biofuels is added to the strong tax cut gradually approved by the government on electricity, which also left VAT at 5%, increased the tax rate on electricity and increased the tax from 7% on generation, with an economic impact of more than 10,000 million
The main obstacle that this measure may encounter is that the cost of the raw material, the price of natural gas, will continue to rise in the coming weeks, and the beneficial effect of the reduction in VAT.
This Tuesday, the gas price on the international market is around 180 euros/MWh, although it has reached a record high of more than 300 euros/MWh this summer, setting all alarm bells off.
The Legislative Decree also creates a new active demand response service that will increase the flexibility and security of the electricity system. It makes it possible to solve situations with maximum technical efficiency and as little environmental impact as possible of significant deviations between generation and consumption that occur in the hourly period immediately preceding that of delivery, or even at the time of delivery itself. This service can be provided on request in exchange for economic revenues awarded through annual auctions.
Red Eléctrica is entrusted with the management of the new service and launches the annual auction, in which all consumers – dealers and direct consumers – larger than 1 Mw can participate. The first auction will be held very soon, as the new service must be operational before November 1st in view of the winter season.
The Executive has also included another measure announced by Pedro Sánchez in the latest energy debate against PP leader Alberto Núñez Feijóo in the Senate: the possibility that cogeneration will temporarily leave its regulated remuneration regime so that it will be applied to the Iberian cap .
The price situation in the energy markets has resulted in the production of more than half of the installed CHP capacity in Spain being stopped in August. This has a very negative effect on the most heat-intensive industrial sectors, but it also means a loss of energy efficiency in the economy, as the energy not produced by cogeneration is replaced by other technical solutions – combined cycles and gas boilers. lower overall energy efficiency.
To solve this problem, CHP installations can temporarily waive their regulated remuneration regime, so that they fall within the scope of the Iberian Mechanism and receive the adjustment charged by gas-fired plants. This temporary exemption can be requested as long as the Iberian mechanism is in force.
A CHP installation simultaneously produces heat and electricity more efficiently than when heat is generated on one side and electricity is generated on the other, resulting in a primary energy saving of approximately 10%. Therefore, the recommissioning of the discontinued combined heat and power plants will yield savings that in the best scenario can reach 1.2% of the daily gas demand.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
