The reduction of VAT on gas to 5% will mean savings on the bill of up to 20 euros per month

The VAT reduction from 21% to 5% will also apply to wood products such as firewood, briquettes and pellets and will be extended until December 31. The cogeneration plants, which generate 20% of electricity production, will be remunerated with the gas cap mechanismMinister Ribera announces the creation of the Rapid Demand Response Service to improve the flexibility of the electricity systemThe Council of Ministers approved this Tuesday the VAT reduction from the current 21% to 5%, within the measures put in place under way to deal with the economic impact of the energy crisis. The third vice president and head of the Ministry for the Ecological Transition has indicated that the VAT reduction will last until December 31, although she does not rule out that this tax deduction (like the one that also applies to the electricity bill) could be extended next year “if necessary”. In addition, Teresa Ribera has announced that this VAT rate reduction of up to 5% will also apply to wood products such as firewood, briquettes or pellets. It will not apply, on the other hand, to LPG (liquefied petroleum gas) since it is currently not allowed by European regulations. The Ministry for the Ecological Transition and the Demographic Challenge has calculated that the application of the tax measure during the next three months will provide savings of around 210 million euros. Rebates on gas bills In Spain there are 7.9 million gas customers natural, according to data from the National Markets and Competition Commission referring to the first quarter of 2022. Of these, almost 20%, 1.5 million are in the rate of last resort (TUR), while the rest correspond to the market at free price. According to the calculations made by the Selectra tariff comparator, for those who are in TUR 1 (for an annual consumption of less than 5,000 kWh), with an approximate consumption of 291 kWh, the tax reduction with current gas prices would mean that the invoice went from 28.48 euros to 24.71. That is to say, in this case the reduction of the tax would suppose a saving close to 3.8 euros per month. In the case of a home with the TUR 2 rate (for natural gas consumption greater than 5,000 kWh/year and less than 15,000 kWh/year) and consumption close to 1,200 kWh per month, the bill would be cut by 13.60 euros with the new VAT rate, going from almost 103 euros to 89. Finally, customers who are in TUR 3 (gas consumption between 15,000 kWh/year and 50,000 kWh/year) and with an approximate consumption of 1700 kWh month, with market prices in September, they would benefit from savings of more than 18 euros, going from a monthly bill of 138 euros to 119. According to data from the Institute for Energy Diversification and Saving (IDEA ), the average consumption of natural gas in homes with gas heating, hot water and cooking is close to 8,000 kWh per year; while in homes whose use of gas is intended solely for domestic hot water and cooking, it is close to 2,960 kWh per year. Support for cogeneration Within the package of measures approved this Tuesday by the Government to support consumers in the face of the energy crisis there is also the inclusion of electricity producers from cogeneration in the so-called ‘Iberian exception’. Thus, industry cogeneration plants may temporarily waive their regulated remuneration in order to enter the scope of application of the Iberian mechanism. The increase in gas costs has forced many cogeneration installations, which use heat from industrial processes to produce electricity, because they did not perceive the adjustment charged by gas plants with the application of the Iberian mechanism; receiving only the price of the wholesale electricity market after applying the mechanism, which is much lower.”The measure adopted by the Government not only provides more electricity but also saves gas, because cogeneration plants are more efficient. They will make it possible to save more than 10% of what they are demanding from the system today and will mean a saving of 1.2% of the daily demand for natural gas in Spain,” Ribera pointed out. The minister has also announced the creation of the Rapid Demand Response Service, thus recovering the interruptibility mechanism, which will increase the flexibility and security of the electricity system “It consists in that with a period of 15 minutes the electricity supply can be reduced by a period of three hours. It allows marketers and direct consumers to reduce their demand in exchange for remuneration”, explained the person in charge of Ecological Transition.