Fenosa chief demands end to electricity tariffs

MADRID, April 23 (Reuters) - The Chairman of Spanish power company Union Fenosa (UNF.MC) on Wednesday demanded an end to officially set electricity tariffs and reform to solve the problem of the tariff deficit.

The government has proposed that from 2009, prices should be set by the market but has left individual retail power users and small companies out of the plan.

Pedro Lopez, speaking at the company's annual general meeting, said reform was necessary to promote liberalisation and competition.

"The free development of prices needs the elimination of decisions from the administration," Lopez said. "Tariffs should disappear."

Lopez also called on the new Socialist Party government to move urgently on the problem of the tariff deficit -- the difference between the true cost of producing power and what companies can charge via the tariff -- which he put at 4.7 billion euros in 2008.

"We hope the new government will face this problem with the urgency required, otherwise liberalisation and competition are impossible." (Reporting by Carlos Ruano; writing by Joe Ortiz)