LAS PALMAS DE GRAN CANARIA, Spain, Dec. 4 (UPI) -- Spain's energy firms "shouldn't be worried" over a move to withhold public funding to help plug "tariff deficits," Industry Minister Jose Manuel Soria says.
Soria, speaking to reporters Monday in the Canary Islands, defended a last-minute decision taken by the government last week to withhold $4.9 billion earmarked as this year's public contribution to plugging Spain's tariff deficit -- the difference between costs of running the electrical system and the revenue generated by sales of power to households and businesses.
The energy companies -- including Spain's "Big Five" of Iberdrola, Endesa, Gas Natural Fenosa, Hidrocantabrico and E.ON Spain -- strenuously objected to the move during a tense Thursday meeting with Soria, El Pais reported.
The newspaper said some of them accused the government of deception after promising in July to share the costs of reaching this year's tariff deficit-reduction goal between the public and private sectors and ratepayers.
Until last week, the government had insisted that a $6.1 billion chunk of Spain's estimated $35 billion tariff deficit had to be eliminated this year, prompting power industry fears they would have to make up the $4.9 billion in withheld public funding themselves.
That, they claimed, would result in weakened financial positions and higher energy bills for their customers.
Soria attempted to calm the waters Monday, however, saying the energy companies have been assured the government has decided to be flexible in its tariff deficit target, the Spanish news agency EFE reported.
"I myself explained a few days ago to the representatives of the largest utilities in Spain -- those that account for approximately 95 percent of the country's entire generation -- how the current [tariff deficit] can carry the endorsement of the state," he said. "They should not be worried."
The decision, Soria said, was reached in order to help Spain meet its larger goal of meeting European Union demands of reducing the country's budget deficit to less than 3 percent of total economic output by 2016.
"In Spain, on economic policy, there is one priority over all others, which is the containment of public deficit," he said. "It's above all other considerations" for "a very simple reason: Because if we do not meet the deficit target, the implications for the economy in general and particularly for our country are risky -- there are consequences that affect all areas of the economy."
Soria also asserted the withholding of public funds wouldn't automatically translate into higher consumer energy bills, pointing out prices are set by open-market auctions.
"The government does not raise or lower the rates," he said. "For example, in the auction that was held in June for the period of July to September, there was a reduction in the price of electricity by 6.2 percent."
Soria, however, didn't mention that October's auction closed with gains of 7.6 percent, which in turn caused a rise of 3.1 percent in consumer bills, EFE reported. Even including the decline the industry minister cited, power bills have has gone up 11 percent since January 2012.