Spain freezes electricity prices to ease effects of crisis

24th June 2010, Comments 0 comments

Spain's government Thursday announced a freeze in electricity prices, suspending a 4.0-percent hike scheduled for July, in order to help households and businesses cope better with the crisis.

"The (economic) situation demands it," Industry Minister Miguel Sebastian said.

He said energy was "a fundamental factor for the well-being of citizens and competivity" of businesses.

The decision was taken as part of an agreement with the Socialist government and the conservative opposition Popular Party, Sebastian told a news conference.

An association of power generating companies, UNESA, slammed the move as "very serious."

The power companies are already unhappy about current electricity prices which they believe do not reflect the real production costs for renewable energy sources.

A consumer association, Facua, described the measure as "insufficient."

The government's decision helped push the Madrid stock exchange down 3.24 percent just before Thursday's close.

Power companies were badly hit, with Iberdrola down 4.52 percent at 5.085 euros and its rival Endesa off 3.04 percent at 13.33 euros.

© 2010 AFP

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