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The tariff deficit is defined as “the gap between the cost of generating, transporting, distributing, and selling electricity and what consumers pay for it. In Spain, so far this year, the accumulated deficit amounts to 2,313.89 million euros. In Ecuador, it is approximately 603 million dollars , resulting from emergency contracts.

In practice, the  tariff deficit means that the State or consumers end up assuming a deficit that accumulates year after year, generating debt and putting pressure on future tariffs.

For these deficits to continue, several factors have contributed, such as increased demand, the need for new infrastructure, dependence on imported energy – resulting in a lack of energy security – high financing costs, political changes, a lack of long-term policies, maintaining subsidies for decades, and a lack of planning in the face of global changes in energy needs and the impact of climate change. 

Developing countries and least developed countries (LDCs) mainly lack long-term policies, prioritize their limited resources on other needs such as health or education, their infrastructure is more affected, they have limited access to financing, which makes investments more expensive and perpetuates the tariff deficit  (UNCTAD) .

Spain has accumulated tariff deficits for years. In 2024, the debt fell to €5.727 billion (a 27.2% reduction compared to 2023)  cnmc.es. Even so, the estimated annual deficit for 2025 will be €2.390 billion, with a weighted average cost of 3.498%  cnmc.es. According to projections, the debt will be fully paid off in 2028  cnmc.es. The most recent provisional data (June 2025) confirms a monthly deficit of €1.07652 billion, with revenues of €6.0603 billion compared to €7.13682 billion in costs. So far this year, the accumulated deficit amounts to €2.31389 billion, of which only €25.21 million has been charged to the General State Budget  El Periódico de la Energía .

Ecuador has suffered an energy crisis in the last two years, and several analyses point to a structural tariff deficit. The Electricity Regulation and Control Agency (  ARCONEL)  estimated a tariff deficit of approximately  $603 million , stemming from emergency contracts in 2024. (Diario Expreso ) 

The government has implemented tariff adjustments, especially for large consumers (high voltage AV1), raising prices from USD 7.91 to USD 10.22, in order to finance new generation and reduce the financial imbalance.  El Comercio .

However, there is a study by the Agency itself, prepared in 2018, which places the tariff deficit at over $1 billion.

At the same time, it is acknowledged that the rates never reached the real cost level, due to social and political asymmetries, which has maintained a critical financial situation for years  . revistagestion.primicias.ec

In conclusion, each country has its own particular situation and energy requirements, but the common thread is that demand is growing, and although globally renewable energies continue to reduce the levelized cost of electricity (LCOE), this reduction is not reflected in the final consumer's experience. While Spain's energy deficit is decreasing, the correction will still take several years and has significant financial implications.

Each country also has its own particular way of presenting information. To make a comparison between several countries,  comparable indicators must be generated to standardize cost recovery, other amounts of funds/debt, or the rules they use for calculating subsidies.

This boils down to the fact that, ultimately, the deficits are paid for by the people of each country, directly or indirectly. Given this, the democratization of energy is an inevitable change in the global electricity system.