Electricity vendors offer free market rates of between 650 and 700 euros a year (a year ago we would be talking about more than 1,000 euros), which is about 100 euros less compared to the regulated rate, which is known as Voluntary Price for the Small Consumer (PVPC). According to the comparator of the National Commission for Markets and Competition (CNMC), the cheapest is one offered by Energía Nufri. Check here the daily prices of electricity in La Información.
The annual amount would be 652.88 euros for a home with a contracted power of 3.5 kilowatts (kW) and an average consumption of 3,300 kilowatt hours (kWh), which means a monthly bill of 54.4 euros. The rate includes hourly discrimination: 0.188409 euros/kWh peak energy term, 0.134598 euros/kWh flat energy term and 0.104762 euros/kWh valley energy term.
Nor does it record the cost of the ‘Iberian exception’, which has not worked for almost two months and, therefore, would be zero, and that associated with the financing mechanism of the social bonus. Continuing with the Competition list, the second most affordable rate in the free market is from Endesa. It is called Conecta Endesa and it costs 661.52 euros per year, that is, 55.12 euros per month. In this case, the price of the power term at peak hour is 33.080628 euros/kW, while that at off-peak is 8.196888 euros/kW.
The cheapest rates, without permanence to save 100 euros
On its side, the third cheapest rate is also from Energia Nufri. It would be 664.25 euros per year or, what is the same, 55.35 euros per month. It must be remembered that, currently, a reduced VAT rate of 5% is applied to electricity for all consumers with contracted power of up to 10 kW, whether they are individuals or companies, and as long as the price on the wholesale market remains above of the 45 euros/MWh. Likewise, the 7% generation tax is suspended and the special tax on electricity is reduced to the minimum allowed by Europe (from 5.11% to 0.5%).
None of the three offers requires the contracting of complementary products or services, and they do not have permanence or penalties. They are followed by Endesa One 3 Periods (666.84 euros/year), Iberdrola 2.0TD Plan Online (670.33 euros/year) and Endesa One Luz (671.19 euros/year). It should also be emphasized that discounts can be applied to free market rates, combine supplies (electricity and gas) and are usually much more stable for the consumer. In fact, it is known in advance how much is going to be paid, but it also has the downside that it requires the consumer to pay more attention when contracting their rate (since each one adapts to a certain type of consumption) and that can be revised over time.
On your side, before the energy crisis broke out in the summer of 2021, in the heat of the increase in the price of gas and CO2 emission rights, a customer with a regulated rate has been paying less for the electricity bill, according to data published by the CNMC. Large companies have regularly promoted free market rates, which are more profitable for them than for consumers, and have taken advantage of the PVPC price escalation so that consumers leave behind that controlled rate in exchange for promises of savings, at least in the short and medium term. However, it is true that with electricity completely skyrocketing after Russia’s invasion of Ukraine, the customer in the free market has come out ahead because they have agreed to a lower price than the wholesale market with their retailer. In addition, it also benefits from the Government’s tax reduction.
The volatility of the market has caused millions of consumers to switch from the regulated market to the free one. According to the CNMC comparator, the amount that an average consumer would pay right now -like the one described at the beginning- under the PVPC would be 764.10 euros per year (63.67 euros per month). The regulated tariff was canceled by the Electricity Sector Law of 2013 and is regulated by Royal Decree 216/2014, and consumers have a reference marketer contract (COR), designated by the Ministry for Ecological Transition, and a contracted power not more than 10 kW. It is also the rate that allows vulnerable consumers to benefit from the electric social bonus.
In June 2021, the new electricity tariff came into force with which consumers began to have differentiated prices by hourly sections, for power and consumption. The idea was that the consumer could obtain savings by shifting the use of household appliances to cheaper periods. Specifically, consumption is differentiated into three periods: rush hour -between 10 a.m. and 2 p.m., and between 6 p.m. and 10 p.m.-, with more expensive prices, flat hour -from 8 a.m. to 10 a.m., from 2 to 6 p.m. and from 10 p.m. to 00 a.m.-, with intermediate prices, and off-peak hours -from 00 a.m. to 8 a.m., and all weekends and holidays-, with cheaper prices. However, with the rise of renewable energy production (especially solar) consumption patterns have changed and it is no longer cheaper to leave the washing machine programmed at night, but during daylight hours.
Months later, the department headed by Teresa Ribera launched a public consultation to modify the PVPC, but it came to nothing. The process was resumed after the European Commission (EC) imposed a tariff review on Spain as a condition for approving the ‘Iberian exception’. The Executive has prepared to reformulate the calculation of the cost of electricity production to provide the PVPC with “greater stability” while preserving the market price signals (hourly) and in the medium term.