Spain's Sebastian Planning to Secure Energy Accord With Opposition Party

Spain’s Industry Ministry Miguel Sebastian will restart talks with the main opposition party this month in a bid to reach a wide-ranging agreement on energy policy, a ministry spokesman said.

Officials are aiming to reach an accord on the price consumers pay for their electricity, subsidies for renewable energy and the future of Spain’s nuclear plants, said the spokesman, who asked not to be named in line with government policy, in an e-mailed response to questions.

Sebastian and the People’s Party’s economy spokesman Cristobal Montoro agreed to freeze a planned increase in electricity prices in June. While the decision helped to shore up the competitiveness of Spanish industry and the spending power of the country’s consumers, it exacerbated the problems for the power sector, in which the regulated prices charged to users don’t cover the cost of generating the nation’s power.

The talks come as Prime Minister Jose Luis Rodriguez Zapatero heads into negotiations to secure support for his 2011 budget. The premier is struggling to push through the steepest spending cuts in 30 years without a majority in parliament.

The governing Socialist Party lags the People’s Party by 8.9 percentage points, according to a poll of 500 people conducted Sept. 1-2 and published in El Pais newspaper Sept. 5. The margin for error was 4.5 points.

Europa Press reported Sept. 5 that the government had abandoned the effort to secure a broad-based agreement because Montoro refused to accept the government’s decision to close the Garona nuclear plant, owned by Endesa SA and Iberdrola SA, in 2013. Sebastian’s deputy, Pedro Marin, said on July 6 that the government will not revisit that decision.

Nuclear vs Renewable

“Spain needs to use all sources of energy, from nuclear to renewables,” Montoro said June 30. “If we want to provide stability for investors we need to guarantee the profitability of their investments.”

Investors have protested to the government over its plan to reduce the subsidy that photovoltaic plants earn, saying that existing plants don’t benefit from the decline in the cost of solar panels. The prices they earn are guaranteed for 25 years under Spanish law.

Should it prove impossible to reach a comprehensive agreement, Sebastian will look to secure support from Montoro on individual issues, the spokesman said. The parties have similar views on changes to the rules governing renewable power production, he added.

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net

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