The price increase of the wholesale market will affect those indexed contracts, that is, the PVPC Tariff regulated by the Government. The Voluntary Price for small consumers is the regulated price for consumers with less than 10kW of power contracted in Spain. The cost of the PVPC is determined based on the hourly price of the daily markets managed by OMIE during the period to which the invoicing corresponds. Additionally, this cost will incorporate other technical management processes of the System Operator.
In Spain there are more than 11 million consumers under the Small Consumer Voluntary Price (PVPC), unlike the more than 15 million Free Market where our company LUMISA is located.
As the media advances, electricity prices will have an increase of 21% for all those consumers of the regulated market, PVPC. This rate is the one that is most affected by the price increases.
Why will the price of light rise?
This is due to the fact that the price of the auctions is fixed based on a forecast of the electricity that will be consumed in each of the hours of the following day. Spain auctioned 84 million tons each year, allocating since 2013, 90% of the revenue to the Electricity Tariff incentivizing renewable energies.
The demand is covered, first, with cheaper technologies such as hydraulics and wind (rain and wind) and then with more expensive ones such as power plants that work with gas or coal. It is worth mentioning that wind energy, being this cheaper in the electricity market, is the one that has a higher percentage in its consumption with 22%.
The main cause of the rise in the price of electricity is because the prices of natural gas, coal and CO2 emission rights have also increased.
And more specifically, the price of CO2 emission rights has tripled so far this year, going from € 9.3 per ton in January to € 21 per ton in August. Some experts determine that it could even reach € 35 per ton since the reform agreed at the end of 2017 seeks to reduce emission rights, thus getting the coal-fired power plants out of the system through combined cycles, which are less polluting.
Measures of the government.
Through a Ministerial order, energy access tolls are established for 2019, which was remitted to the National Commission of Markets and Competition (CNMC). The Royal Decree-Law 15/2018 approved in October to help and mitigate the rise of electricity in the wholesale market included measures such as savings information as well as the maintenance of current tolls that will have beneficial effects on the income of users.
- Improvement of the Social Bonus through which single-parent families can be accommodated according to their income. Therefore, the maximum income threshold for a family to access the Social Bonus will be increased by 0.5 times the IPREM with respect to the two-parent families. As well as prohibiting the supply cut in supply points where they enjoy the advantages of the Social Bonus and where at least one child under 16 lives, as well as a person with a level of disability of 33% or higher. Another advantage will be that the energy not consumed can be transferred to the next month or at another time.
- Eliminate the Sun Tax, which will boost the electric self-consumption. This will try to reduce greenhouse gas emissions and, in turn, the price of electricity. Thus eliminating the payment of the toll that was passed on to the self-consumers of energy.
- Suspension for 6 months of the tax of 7% of electricity producers, whether nuclear, renewable, coal, among others.
How is it possible to save with the price increase?
In an informative way and in order to see a savings reflected in your bill, you should be aware of what time is cheaper in Spain. Taking into account that today, the average price in Spain is € 63.79 / MWh, with a maximum of € 70.16 / MWh and a minimum of € 55 7MWh.
Taking into account that this increase is reflected in the Regulated Market, consumers who see their electricity bill greatly increased may make a change from a marketer to the Free Market, which varies according to wholesale prices.
Therefore, in the free market, companies set a price of electricity, in the case of guaranteed prices for one year.
In short, if you want to lower your electricity bill, change to LUMISA and discover our rates through this link.