Spain's centre-right government may decree on Friday an electricity rate hike of up to 7 percent for consumers and cut subsidies to power distributors by 10 percent, several newspapers reported on Saturday. However, government sources told Reuters there was no decision yet on the exact content or timing of pending energy sector reforms.
The cut in subsidies to distributors would hold down Spain's rising tariff deficit, which is backed by the government, by some 500 million euros in a year, the media reports said. The government is in the middle of an austerity drive to keep the euro zone debt crisis at bay. The lower subsidies would affect Iberdrola, Gas Natural Fenosa and Endesa and other smaller companies, according to the media reports.
Financial newspapers Expansion and El Economista reported that the distributors would consider legal action against the government if their subsidies were cut but not those of national grid operator REE, which is 20 percent state owned, and gas pipeline manager Enagas, which is 5 percent state owned. Industry Minister Jose Manuel Soria is to take the proposed decree to the cabinet meeting on Friday, March 30, the same day the cabinet is to approve the austere 2012 budget, newspapers reported.
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