One of the novelties included by the Government in the new regulated electricity tariff, the so-called Small Consumer Sale Price (PVPC), is that, as of January 1, 2024, large companies and public bodies will be excluded . In fact, all consumers who are not included in the household or micro-SME category will be expelled from the PVPC.
Currently, approximately 10% of the Universal Supply Point Code (CUPS) with contracted power less than or equal to 10 kilowatts (kW) corresponds to companies. With the above, if the number of CUPS covered by PVPC is around nine million (before the summer of 2021 it had more than 10.5 million customers), the number of micro-enterprises eligible for it is around 900,000. It should also be noted that, according to data from the report from the Ministry of Industry, Commerce and Tourism on business structure and dynamics in Spain, 95.8% of companies in the country are micro-enterprises.
At the moment, the only requirement to qualify for the regulated electricity tariff was to have contracted a power of up to 10 kW. However, from next year, the beneficiaries will have to certify their status as households or micro-enterprises through a responsible declaration, in compliance with Directive 2019/944 on the internal electricity market, that is, companies that use less than 250 people and whose turnover does not exceed 50 million euros or the annual balance sheet does not exceed 43 million euros. To all those companies that did not meet these conditions and have not gone free from next year, the electricity supply will be maintained, in principle, but a 20% surcharge will be applied, according to sources from the Ministry for Ecological Transition. .
What the Executive intends with this new regulated tariff is to reduce the volatility of final customer bills by reducing the weight of the daily market in the calculation of the price of electricity. In this sense, it is intended to progressively reduce the link of the PVPC to the daily market and the more stable prices offered by the Mibel forward markets will be taken into account, where energy is purchased in advance in different future time horizons. For this, the price oscillation -the variation between the maximum and the minimum register- is reduced by a third, going from 27% to 17% the daily shift, and from 23% to 16% in the monthly average during the whole year.
Likewise, the daily prices of the Mibel represent 100% of the PVPC reference and that proportion will be progressively reduced, to incorporate the references of the futures markets, so that these represent 25% in 2024, 40% in 2025 and 55% in 2026. The distribution will be made in such a way that the monthly product represents 10% of the total, the quarterly product stands at 36%, and the annual product at 54%. The third vice president and minister for the Ecological Transition, Teresa Ribera, explained that the deadline has been given until the beginning of 2024 so that agents can adapt to the new methodology and offer this rate without problems. There have already been problems and delays in the issuance of invoices with the entry into force (in June 2021) of the new electricity tariff through which consumers began to have differentiated prices by time slots.
The question now is whether it is convenient to continue in the free market or return to the regulated one. Currently, for an average household with a contracted power of 3.5 kilowatts (kW) and an average consumption of 3,300 kilowatt hours (kWh), the regulated tariff has an annual cost of 660.48 euros, while the cheapest in the Free market is around 646 euros. We will see what happens when the changes are fully effective (from 2024). Clients who want to return to the regulated market will only have to request it from one of the reference marketers, although they must first verify that they do not maintain permanence with their company.
Before the energy crisis broke out in the summer of 2021, in the heat of the increase in gas prices and CO2 emission rights, a customer under the regulated rate has been paying less for the electricity bill. In fact, many utilities have been accused of inflating the price for free market customers under the premises that, on the one hand, these rates offer greater stability and, on the other, that the user is left completely unconcerned. However, after the rise in prices, the client in the free market has been able to win because they have agreed a lower price with their marketer, and, in addition, they have taken advantage of the Government’s reduction.
Taking 2019 as a reference, the last year before the covid-19 pandemic, and according to the information sent by the marketers to the CNMC, the final average prices in the free market (including access tolls and taxes) increased said year for all types of consumers compared to 2018, with the exception of industrialists, with variations of 2% for domestic consumers and 4% for SMEs. As a comparison, for consumers covered by the PVPC, the price was reduced by 7%.
With the entry into force of the ‘Iberian exception’, all the marketers on the free market adjusted their rates to make them more competitive and, therefore, continue to attract customers, which resulted in a new commercial ‘war’. Endesa has been the last to intensify the battle and has challenged Iberdrola, Naturgy and Repsol with discounts on bills for users who reduce their electricity consumption. However, it was at the end of 2021 when the large electric companies launched to conquer customers covered by the regulated rate, taking advantage of the fact that they were affected by the rise in electricity prices in the wholesale market (pool). The campaigns ensured stability for years, while consumer organizations warned of sharp price increases on the free market and called for “extreme caution.”