Spanish utilities are receiving a growing amount of requests for deferral of payment, creating a complex financial scenario for these companies in the short and medium-term.
It is not just about deferral of payments, but also reduced power consumption for SMEs and waivers for health facilities, among others. For now, the Executive has established five measures that affect the regulation of the electricity sector:
- Power cuts are prohibited during the state of emergency.
- The creation of a new category of power subsidies for people especially affected by halted economic activities. The automatic renovation of the current subsidies until September 15.
- Self-employed workers can reduce their current contracted power. Once the state of emergency ends, they have three months to return to the original contracted power without additional costs.
- Furthermore, self-employed workers can terminate the contract and then resume it without additional costs; within a period of three months after the end of the state of emergency.
- Self-employed workers and SMEs can suspend payments of the electricity bill during the state of emergency. Subsequently, they will have up to six months to pay these bills.
Impact of the crisis
The Association of Electricity Companies said that companies have approved measures aimed at mitigating the economic impact for their clients. Apart from the power subsidies, there are other solidarity measures. These measures are aimed at protecting the most affected communities.
Aelec also informed that power consumption has significantly dropped since the beginning of the state of emergency. This has an impact on the electricity sector with the loss of revenue due to lower demand and modifications in power contracting.
The association assures that the measures in place to face the state of emergency ensure that retailers will not be forced to pay the toll for clients who benefit from these initiatives. Similarly, there are guarantee mechanisms in place for companies with economic difficulties.
Credits for payment defaults
The Association of Independent Energy Retailers believes that the regulations in place to face the COVID-19 emergency are not equally sharing the economic impact between regulated and non-regulated activities and are asking the State and the banking sector for guarantees.
According to ACIE, the approved regulation does not exempt retailers from paying transportation and distribution duties, whether or not there are deferred payments from vulnerable clients. Hence, right now retailers are financing distributors in cases where said default exists.
Therefore, and given the temporary extension of the emergency state; the association is asking the Ministry of Ecological Transition to create guarantees for these “energy loans” imposed on independent retailers.
Taking care of customers
Since the beginning of this state of emergency, Naturgy implemented a plan to postpone the payments of the next three energy bills and start making these payments as of September; clients will have payment terms of 12 months, without interests.
As for Iberdrola, nearly 100,000 customers have benefitted from the initiatives set in motion by this company, which are especially focused on the most vulnerable.
Endesa has halted power and gas cuts for residential customers. It has also offered payment options for SMEs and self-employed workers, which have the option of delaying payments; reducing the contracted power, and temporarily suspending power supply without costs.
As to EDP, this company emphasizes its power reduction plans for clients. This program adapts power contracts during the state of emergency. Clients can reduce their energy bills by reducing the contracted power if their businesses have been forced to slow down their activities.
For more information, check Energía16