First proposal on the regulated rate. The large electricity companies advocate eliminating the so-called Voluntary Price for the Small Consumer (PVPC) and maintaining a single exclusive regulated tariff for vulnerable consumers, as proposed by the Association of Electric Power Companies (Aeléc). This future rate would not be indexed to daily market, as currently with the PVPC, but would be linked to the prices of the forward markets, which would translate into more stable prices. It is the response of the employer that groups together Iberdrola, Endesa, EDP and Viesgo to the public consultation launched by the department headed by Vice President Teresa Ribera so that the main agents of the sector send their contributions on a possible modification of this rate.
The PVPC affects 10.7 million users, of the millions of domestic consumers (supply point not exceeding 1 kilowatt and with a contracted power less than 10 kilowatts). And it is the only one with which consumers considered vulnerable can access the social bonus, a discount of between 25% and 40% enjoyed by around 1.3 million consumers, and at minimum vital supply. But being indexed to the price of wholesale market, it immediately transfers to consumers any alteration in market prices, whether upwards or downwards. The wholesale price also serves as a reference for the remaining 18 million users with contracts in the free market.
The regulated tariff has always been conceived as the more competitive rate, compared to other forms of contracting in the free market, as has been made clear in different reports by the energy regulator, the National Commission of Markets and Competition (CNMC), and even also the Bank of Spain in a recent report this summer. However, the evolution of electricity prices in recent months -with wholesale prices 500% higher than those of a year ago- has motivated the opening by the ministry headed by Ribera of “a reflection period about its current configuration, which may lead to a new regulatory development to modify its structure “.
Aeléc proposes, in addition to eliminating it for almost the majority of users, that it be governed by the prices of the forward markets, which would give it more stability. However, it would not be a change from morning to night, therefore, the association proposes to implement measures that allow “progress in the replacement of the indexation to the daily market by an indexation to forward markets “, as well as fix a “transitional period “ for the passage of consumers not vulnerable to the free market. That is, most consumers would have a rate at a agreed price between the client and the electricity marketer.
Pay per use
More complex is the proposal of the Fundación Renovables that bets that the price of electricity responds to “pay per use”, which would mean a true “cleaning” of the electricity tariff and the regulated costs contained in it so that they become variables, charging for the managed energy and not for the return on investments made years ago. “This would allow the cost transferred to the consumer to be more transparent and reduced, enabling a price signal that reflects the real costs”, explains this organization.
In addition, in the opinion of the Fundación Renovables, the rate is also should be progressive. So that there are two sections for the domestic segment: minimum vital consumption, with a minimum power of 2.3 kW, a consumption of the first 1,500 kWh free, establishing parameters according to the family composition and a VAT at 4%, a section that becomes free by creating a new social rate for the most vulnerable groups and at risk of exclusion; normalized consumption, with the price to charge signal according to the system itself with transparency rules, and penalized consumption for values above the previous level, establishing a coefficient of increase, fixed or progressive, of the price of electricity consumed in this section.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.