It will take into account a basket of monthly, weekly and annual prices to avoid the current oscillations of the PVPC, which have frightened 10 million households in the last year
The Ministry of Ecological Transition has put on the table the first draft to modify the regulated electricity rate, a contract that has given too many scares in the last year to millions of households due to the volatility of electricity prices that it includes. The department headed by the third vice president, Teresa Ribera, has put out for public consultation the document for the reform of the PVPC (Small Consumer Voluntary Price) with which it will try to stabilize this receipt by taking new references beyond the prices of the wholesale market that daily and hourly exposes the market.
Broadly speaking, the idea of the Executive is to take as a reference a set of temporary prices that can be monthly, quarterly and even annual averages, instead of the current hourly references that come to disperse the electricity cost throughout a day until get to double and even triple it, depending on the hours in which each home makes a more intensive consumption of light. To avoid these large fluctuations, annual prices will be taken as the main reference and thus an attempt will be made to achieve a variation that does not exceed the range of between 15% and 20%.
This reform of the regulated tariff was one of the great commitments acquired by Spain before the European Commission after authorizing the Iberian mechanism by which the price of gas in the Iberian market was capped. Because Spain is still the only country that maintains a regulated rate as volatile as the one that exists at the moment.
In France, for example, it is fixed for one year and its price is basically calculated as an average between the cost of historical nuclear power and the forward market price. In Portugal, also one year, it is calculated as an average of the term market price (for what the CUR acquires in term) and a price forecast made by the country’s regulator. In Great Britain, the regulated rate is calculated every six months, and in Italy, every quarter, to give stability to the received receipts, although it is planned to abolish it in 2023. In Germany, for example, this option no longer exists.
The Ministry of Ecological Transition already launched a prior consultation in October last year to change this modality of the PVPC, which can accept supplies with less than 10 kilowatts of contracted power. It was about collecting “proposals to reduce the volatility of the PVPC and optimize its design with a view to the energy transition process”. It was one of the requests from the power companies, and one of the measures included in the Government’s shock plan. But its processing was not immediate. And, finally, it was discarded under pressure from consumer and user organizations.
However, the escalation in electricity prices that Spain has suffered since last summer, aggravated by the war in Ukraine, has caused a radical change in the rates that citizens had contracted, by moving en masse from the regulated to the free market as never before. fact, in search of more stable rates. Specifically, 1,250,101 households opted in 2021 for some of the dozens of stable rates offered by marketers and decided to leave the PVPC, after registering continuous historical cost records.
This large number of changes of consumers from the regulated to the free market represents more than doubling the transfer request between both types of rates in 2020, when it barely exceeded half a million portability. In addition, the figure registered last year by the National Commission for Markets and Competition (CNMC) reveals a record number of rate transfers, compared to 663,000 in 2019 or 737,000 in 2018.
There were also those who switched from the free market to the regulated one, although they possibly did so in the first part of last year, when pool prices were still relatively low, before they began to pick up in June. Some 428,000 households opted for the regulated rate from one of the free ones.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.