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Energy bills in Spain are climbing fast and the government has moved to limit the damage. Petrol is approaching €2 a litre, wholesale electricity prices have hit levels not seen since the height of the Ukraine crisis, and gas prices are rising sharply just as the heating season begins. The Council of Ministers approved a new package of measures on Tuesday, the third anti-crisis decree since the conflict in Iran began disrupting global energy markets in March.

 

Rising diesel prices have already been flagged as a risk to food costs earlier this month. Tuesday's decree addresses that directly, extending the existing fuel tax discount through to the end of the year, though it will taper down. The reduction stands at 20 cents per litre in October for both petrol and diesel, dropping to 13 cents in November and 6 cents in December, with a mechanism to revert to 20 cents if prices spike above 15%. At present, 95-octane petrol is averaging €1.952 per litre nationally, with 40% of Spanish petrol stations already selling it at €2 or above. In the Balearic Islands that figure reaches 80%.

 

The most significant measure for household budgets is the cap on the regulated gas tariff, which covers around three million consumers. Without intervention, bills were set to rise by more than 45% from October 1, which the Consumers and Users Organisation estimated would mean annual bills jumping from around €600 to nearly €910. The government has limited the increase to 15%, and the cap will remain in force through subsequent quarterly reviews until any resulting deficit is recovered. The price of a butane gas cylinder, which had already hit a four-year high heading into autumn, is now capped at €19.55 until June 2027.

 

A VAT reduction on electricity and gas bills from 21% to 10% is also now in prospect, triggered automatically if September's CPI figures confirm inflation running 15% higher than the same month last year. The preliminary September figure of 4.9% against last year's 3% suggests that threshold is likely to be met, which would also cut the Special Tax on Electricity from 5.11% to 0.5%.

 

For the most vulnerable households, existing protections have been extended to December 31, including extraordinary electricity social bonus discounts of 42.5% for vulnerable consumers and 57.5% for the severely vulnerable, as well as a ban on cutting off water or energy supplies.

 

On the supply side, the government has also raised the minimum required reserves of liquefied natural gas from 16.5 to 21 days under the Winter Action Plan, a precaution against sudden demand spikes or supply chain disruption in the months ahead.

 

The total value of government economic support since the conflict began now stands at €12 billion. First Vice President Carlos Cuerpo confirmed that two percentage points of September's 4.9% inflation figure are directly attributable to rising energy prices. For anyone already watching their bills carefully, the next few months are going to require some close attention.

 

 

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