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Power companies may have to foot Spanish debt costs

Mon 13th Jun 2011

Spain's energy regulator has suggested that the country's Utility companies should not receive the full value of the 7 billion euros worth of energy-tariff debt they plan to sell to a government-backed investment vehicle.

The proceeds of the sale should instead be used to bring about a balance between the government, consumers and the providers, which together should share the burden of financing the power-rate deficit, the Comision Nacional de Energia announced today.

"This Commission considers there should be an adjustment in the price that companies receive"

The 7 billion euros of debt which the government has authorized for sale is just a fraction of the amount currently held by Iberdrola, Endesa, Gas Natural and EON, and the proceeds would reimburse them for not passing the rising costs of production over to the consumer for the last ten years.

The Spanish utility companies have already sold 7 billion euros of debt to the tariff-deficit fund, known as FADE.

Spanish law dictates that Utility companies are obliged to cofver the difference in cost between the government-controlled energy prices and the government-approved cost of delivering electricity.

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