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Gap between electricity output costs and rates swells in 2012

Increase in premiums on green energy sees “tariff deficit” balloon beyond government limit to four billion euros

The premiums paid to producers of electricity using alternative sources of energy hit record levels last year, helping to exacerbate the problem of Spain’s so-called “tariff deficit,” the difference between what it costs to generate power and what can charged in rates regulated by the government, the National Energy Commission said on Monday.

The increased layout on green energy occurred despite the fact that the Popular Party administration of Prime Minister Mariano Rajoy called a halt on premiums for new renewable projects at the start of the year.

Subsidies paid to non-traditional producers of energy in the first 11 months of 2012 amounted to 8.012 billion euros, up 22.6 percent from a year earlier. Despite a reduction in distribution and transport costs, this was the main reason behind an increase of 14.1 percent in the tariff deficit to 4.072 billion euros. The shortfall far exceeds the 1.5-billion-euro limit the government attempted to set.