The Government will cut back reductions within the social bonus however maintains the prohibition of cuts | Economy | EUROtoday

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The Government will apply a gradual discount, beginning subsequent September 30, within the reductions that susceptible or very susceptible households – the beneficiaries of the social bonus – acquire on their electrical energy invoice. The discount within the low cost might be at a charge of seven.5% quarterly, in line with sources from the Ministry for the Ecological Transition and the Demographic Challenge. The Executive, nevertheless, will preserve the prohibition on interrupting primary provides (electrical energy, water and gasoline) to susceptible shoppers till December 31.

“In the last semester, natural gas prices have been greatly reduced in relation to the levels registered during the peak phase of the energy crisis and electricity prices have registered historically low levels, largely as a result of the incorporation of new renewable installations,” they argue from the ministry. “However, geopolitical uncertainty stays and the worldwide scenario recommends performing with warning when normalizing safety for susceptible teams.” It is exactly the same policy and the same argument used in the case of VAT on basic products in the shopping basket.

The current discount on the social electricity bonus, of 65% on the regulated bill for vulnerable consumers and 80% for severely vulnerable consumers, will remain as is for the remainder of the summer, until the end of September. A period that, the Government recalls, “coincides with a rise in consumption that’s recorded to fight excessive temperatures.” From then on, this reduction – financed by the rest of the consumers and also by the State, after several contrary rulings in disputes with the electricity companies – will gradually decrease.

Between October 1 and the end of the year, the discount on the PVPC bill will be 57% in the case of vulnerable consumers and 72.5% in the case of severely vulnerable consumers. Between January 1, 2025 and March 31, it will be 50% and 65%, respectively. And between April 1 and June 30, 42.5% and 57.5%.

From July 1, 2025 onwards, the reduction will be 35% for vulnerable households and 50% for severely vulnerable households. This reduction, of an indefinite nature, is thus above the protection prior to the energy crisis of 2021 and 2022, which was 25% and 40%, respectively.

The VAT on electricity, one step away from returning to 10%

This is not the only change that the electricity bill will undergo in the coming months, although in the opposite direction and for all customers, vulnerable and not: things would have to change a lot in the coming days so that VAT does not return to the same level. 10% on July bill.

The reason is the recent rise in the price of the wholesale market and the clause established in the latest package of measures to mitigate the impact of inflation, approved at the end of December last year. It included a clear clause: if the price averages 45 euros per megawatt (MWh) one month, the next month's bill would be taxed at the reduced rate (10%) instead of the usual rate (21%).

So far in June, the price per megawatt hour is around 54 euros and nothing suggests a change in trend in the coming days. In July, with the arrival of high temperatures, the futures market – although imprecise and tending to overestimate the price, the best possible thermometer of what will happen – points to around 70 euros. A trend very similar to what will be experienced for the rest of the year, for which the forecasts point to prices of between 70 and 80 euros per MWh. VAT at 10% to have returned to stay.

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