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CORRECTED-UPDATE 1-Tackling soaring energy bills, Spain to cap gas price, utilities' profits

(Corrects paragraph 4 to say Spain expects additional proceeds from auctions of carbon emission permits, not planning additional auctions)

* Govt to redirect 2.6 billion euros from companies

* Gas price growth capped at 4.4% in Q3

MADRID, Sept 14 (Reuters) - Spain’s cabinet passed emergency measures on Tuesday to reduce sky-high energy bills by redirecting billions of euros in extraordinary profits from energy companies to consumers and capping increases in gas prices.

By limiting the profits that hydro- and other renewable power generators can make from surging electricity prices, the government expects to channel some 2.6 billion euros ($3.07 billion) from companies to consumers in the next six months.

Energy Minister Teresa Ribera told a news conference the measure would remain in place until the end of March, when natural gas prices are expected to stabilise after consumption falls from winter peaks.

In parallel, Spain will use an extra 900 million euros it expects to raise by auctioning carbon emission permits this year to reduce bills, citing high market prices as the reason for the additional funds.

In parallel, Spain will auction an extra 900 million euros in carbon emission permits this year, with the proceeds to be used to reduce bills.

Ribera said the measures under the “shock plan” would slash the average consumer’s monthly bill by 22% until the end of the year.

To protect vulnerable consumers, Ribera announced a ban on cutting off consumers for non-payment of bills would be expanded to 10 months from the current four-month limit.

With voracious demand for natural gas accounting for much of the recent increase in European power prices that have stoked inflation, Spain will limit regulated price increases for the fuel at 4.4% in the third quarter, compared with forecasts for a 28% hike.

Shares in power company Endesa led the decliners in the Spanish electricity sector with a 3.5% drop.

The left-wing coalition government has been under pressure from the opposition and civil society organisations to reduce electricity bills.

Prime Minister Pedro Sanchez announced on Monday that a special electricity tax would drop to 0.5% from 5.1% until the end of the year, while a reduced VAT rate and the suspension of a 7% generation tax would be extended until January.

Altogether, the measures will reduce government revenues by around 1.4 billion euros in 2021.

Spot electricity prices, which make up around a third of consumer power bills, have broken records for weeks, reaching an all-time high of 172.78 euros per megawatt-hour on Tuesday, up 19 euros from Monday, according to market operator OMIE.

$1 = 0.8472 euros Reporting by Nathan Allen and Belén Carreño Editing by Andrei Khalip, Philippa Fletcher and David Goodman

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