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Spanish court upholds utilities' tariff hikes
March 14, 2012 / 3:47 PM / 6 years ago

Spanish court upholds utilities' tariff hikes

* Court says access tariffs must reflect costs

* Access tariffs adjusted every quarter

* Govt mulling ways to cut 24 bln euro deficit

MADRID, March 14 (Reuters) - Spain’s Supreme Court has upheld in principle a request by utilities to raise tariffs for small users to prevent an increase in the companies’ 24 billion euro ($31.5 billion) “tariff deficit”, court documents show.

By law, utilities must ultimately be paid the tariff deficit, which has accumulated over more than a decade as the government has required them to sell power at regulated rates below nominal costs.

Iberdrola and Endesa, the country’s two biggest utilities, requested an increase in access tariffs, which cover transport and distribution costs and subsidies such as for renewable energy, by 904 million euros in the first quarter of 2012.

The utilities said the increase authorised by the incoming People’s Party government in late December was not enough to cover their costs.

The court, although yet to decide on the requested rise, has ruled that access tariffs should be adjusted to prevent gains in the tariff deficit.

The government is currently mulling ways to tackle the tariff deficit and has ruled out placing the entire burden on consumers, already suffering from an economic crisis and the European Union’s highest unemployment rate.

In December, the government decided to freeze first-quarter electricity bills for small consumers by allowing access tariffs to rise by no more than the fall in wholesale “last resort” rates fixed at auction.

“Reiterating measures like this multiplies their disturbing effects and aggravates the amount of the (tariff) deficit, whose payment is postponed, contrary to what the law provides,” a copy of the ruling dated March 8 said.

An Industry Ministry spokeswoman declined to comment on the ruling.

The government has also rejected forcing utilities to write down some of the deficit, which sits on their balance sheets as a receivable.

Utilities want bills to rise in order to pay off the deficit, and a non-binding report by the energy watchdog supported the idea, amongst other measures.

The regulated last resort rate paid by millions of small consumers for the second quarter is due to be fixed on March 21 at an auction. ($1 = 0.7628 euros) (Reporting by Andres Gonzalez; Writing by Martin Roberts, editing by Jane Baird)

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