The reform of the electricity market that the Government is preparing to contain the escalation in electricity prices will exclude almost two thirds of the supply points in Spain. In this way, about 20 million customers, of the around 30 million there are, will not immediately see the cut in the rate that the Executive plans to implement. A reduction, yet to be quantified, which will be limited to those users who have contracted the PVPC (Voluntary Price for Small Consumers) regulated rate, to which less than 10 million customers are covered, according to data from the National Commission of Markets and Competition (CNMC).
The relief in the bill regulated by the Government will occur after more than 1.25 million users left the PVPC in 2021 to go to the free market. In 2020, according to CNMC data, there were 11 million consumers covered by the PVPC in Spain, of the 29.8 million in total. Consequently, at the end of last year the figure would be around 9.75 million. The transfer of the last financial year doubled the volume that had been registered in previous years: 575,000 in 2020 and 660,000 in 2019.
This increase is contextualized in the rise in the electricity bill of those contracts indexed to the spot market price, as is the case of the PVPC. Specifically, it reached 45% in 2021 compared to 2020, which in monetary terms implies 229 euros per year for an average consumer. A rise that contrasts with those users who receive a fixed price in the free market for one or more years. The impulse of the transfer of customers from the fixed to the free market was framed in the last year in addition to the powerful offers launched by the electricity marketers. Now, however, the reduction promoted by the Government will not have an effect on these contracts until their completion, although in the medium term – renewals or new ones – it is expected that the downward pressure exerted by the PVPC will also lead to lower prices.
The reform of the electricity market will still take several weeks, until it manages to pass the examination of the European Commission. This will not be achieved, presumably, until the report on the wholesale market of European regulators (ACER) is known in detail. For the moment, the Government of Pedro Sánchez started last week the commitment of Brussels to attend to “the national circumstances and the mix of the member states”. The president of the European Commission, Ursula von der Leyen, confirmed that there will be an additional consideration with the Iberian Peninsula, whose low levels of interconnections prevent Spain and Portugal from benefiting from the advantages of a marginal market.
Limit gas price
As reported on Monday the Economist, Spain and Portugal will propose setting a limit price for combined cycle offers in the electricity market, according to sources consulted by this newspaper. This limit, which could be around 180 euros (at a rate of 100 euros for gas), will entail the obligation to compensate for the cost of gas not covered, since otherwise the gas plants would not offer in the market and would go to the market restrictions to operate.
The measure would imply an automatic lowering of the electricity rate for customers who are in the regulated market (PVPC) and for those industrialists who go to the spot market. In the medium term, it would also mean a reduction in offers on the free market, which since January have begun to reflect the strong increases in the wholesale market.
The Government hopes to make the Iberian exception operational to lower energy prices in 3 or 4 weeks
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