Europe

Iberdrola offers to freeze industry power prices if govt refrains from 'damaging' taxes

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The logo of Spanish power company Iberdrola is seen on top of Iberdrola's main office building in Madrid October 6, 2014. REUTERS/Susana Vera

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MADRID, Oct 21 (Reuters) - Iberdrola (IBE.MC) offered on Thursday to freeze industrial electricity prices as long as the government doesn't impose taxes it described as damaging.

Energy prices have led to a clash between the biggest Spanish utilities and the government, which believes the companies have benefited excessively from selling their power into markets where prices are extraordinarily high.

As part of a set of measures to control electricity prices, Madrid has announced it will claw back profits from companies including Iberdrola, although Energy and Environment Minister Teresa Ribera has said she will make changes to the decree in the coming weeks. read more

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The utility asked the government to withdraw the legislation, saying that electricity companies had not benefited from the higher prices but had borne the "exorbitant" costs of more expensive natural gas.

"Iberdrola will absorb the increase in energy costs, as far as it is able" in order to shield Spanish industry from the effects of higher prices on international markets, the utility said in a statement.

"But the government must understand that production should not be taxed at such a difficult time, especially after verifying that there have been no extraordinary profits."

CEO Ignacio Sanchez Galan said in the statement that Iberdrola had already saved Spain's industrial sector two billion euros by maintaining previously agreed prices despite the spike in global energy costs.

"Iberdrola will always support Spanish industry," he said.

Earlier this week, Iberdrola decided not to bid in the latest auction of renewable energy capacity in Spain due to regulatory uncertainty. read more

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Reporting by Emma Pinedo and Isla Binnie; editing by Gareth Jones

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