Spain's government will guarantee up to EUR10 billion in debt issued by power companies this year to cover the gap between the price Spanish consumers pay for electricity and the cost of producing it.
The government will also give a guarantee for debt related to that difference for the entire 2009 to 2012 period, the Industry Ministry said in a release. The difference is called tariff deficit in Spain.
The measure "guarantees the future sustainability of the electric system," the release said.
The accumulated tariff deficit from previous years up to now adds up to EUR16 billion, the government said.
The government also said that Spanish power companies will have to pay for the management and storage of nuclear waste themselves, which so far adds up to EUR2.7 billion.
The government said power tariffs will be frozen for certain lower-income consumers and lower-consumption clients - encompassing about 14.5 million people - until 2012. The power companies will bear the cost of that measure.
Espirito Santo Research said in a note to clients that the government measures are "good news to fix the tariff deficit problem" amid the current difficult financial environment.
The analysts added that that the tariff freeze measures could cost about EUR1 billion per year, according to press reports, although that amount is not final.
At 1508 GMT, Spanish utility Iberdrola traded up 2% at EUR6, while peer Endesa was up 3.7% at EUR16.5.