The letter that Iberdrola has sent that you should read carefully

The letter that Iberdrola has sent that you should read carefully

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High inflation, together with the upward trend that the energy market has been dragging for several months, has led the Government to take new measures to contain this price boom, including energy. One of them was the gas cap funding measure.

A decision adopted with the aim of controlling the price of gas and, at the same time, reducing the price of the electricity bill. The measure has been possible thanks to the well-known ‘Iberian exception‘ that both Spain and Portugal achieved at the meeting held by the leaders of the European Union last March. Brussels gave the green light to the Spanish and Portuguese economieswho were suffering from a disturbance due to their isolation energy compared to the rest of Europe.

With this measure, and added to the reduction of VAT on the electricity bill from 10% to 5% announced last week by the President of the Government, Pedro Sánchez, the Government expects a reduction in the electricity bill that could reach up to 20%. Despite this, the cap on the price of gas will entail a cost for all consumers, since it is necessary to compensate for the expenses of the plants that buy gas in international markets. The total cost amounts to 8,400 million euros, of which 6,300 will be assumed by the Spanish, although the savings on the electricity bill will be greater.

Precisely because of this compensatory payment to the plants that generate electricity with gas, Iberdrola has sent a message of calm to its customers, reporting on the latest measures adopted that affect the energy market. On such payment, the energy company ensures the following. “It is a variable compensation and it is going to be passed on to clients as a new concept regulated in invoices. It will not affect your contract as long as you are with Iberdrola and maintain your current price plan”.

On the other hand, the company announced that customers will benefit from the VAT reduction on power starting this July. The VAT It is applied to all concepts of the invoice, including the electricity tax. By default it is 21%, but until 2021 it was reduced to 10%. In 2022 the descent has arrived up to 5%. A measure that was approved in the last extraordinary Council of Ministers that took place last weekend.

Price reduction by 14%, according to government estimates

According to the third vice president of the Government and Minister for the Ecological Transition, Teresa Ribera, the gas cap has managed to reduce the price of electricity by 14%. “The average price of the daily market, adding the cost of the adjustment during these first 15 days of the application of the mechanism, stands at 14% below the price we would have had in the absence of the measure”, he declared during his last speech in Congress.

The gas cap is a urgent and temporary measure, which was applied from June 15, 2022 and will remain in force until it is decided to interrupt it, and whose maximum duration would be 12 months, that is, until the end of May 2023.

The letter in its entirety

Dear Customer:

At Iberdrola we want to give you important and reassuring information about your contract: The electricity market is making headlines every day due to high electricity prices and the new measures approved by the Government.

Measures implemented:

The financing measure of the gas cap implemented by the Government is a measure that aims to reduce the cost in the electricity market, but implies the payment of compensation to the plants that generate electricity with gas. It is a variable compensation that is going to be passed on to clients as a new concept regulated in invoices. It will not affect your contract as long as you are with Iberdrola and maintain your current price plan.

You currently have a contracted capacity of less than or equal to 10 kW and therefore you will benefit from a reduction in VAT from 10% to 5% on power, energy billed and metering equipment rental as of July 1 of 2022.

We remind you that you have a fixed price contracted with Iberdrola and you are not affected by price variations in the electricity market until the end of your contract.

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