The Government expects to approve before the month of July the new regulated electricity tariff with which you want to soften the fluctuations of the electric billas stated by the Secretary of State for Energy, Sarah Aagesenat a breakfast organized by New Economy Forum with the Director of Energy of the European Commission, Ditte Juul-Joergensen. The new Voluntary Price for the Small Consumer (PVPC) rate, which is what it is technically called, should have been approved last year and entered into force at the beginning of this year, according to the plans of the Executive a year ago.
The direct link between this tariff and the wholesale market led to a intense debate at the dawn of the energy crisis that intensified when, after the start of the ukrainian war when gas drove electricity to record levels. Unlike what happened in other countries, where there were increases but after a period of crisis and in a more stable manner, consumers with a regulated tariff in Spain suffered from price increases Immediately.
The formula chosen by the Executive to avoid this volatility is link energy price –one of the four items on the bill, together with the contracted power, taxes and regulated items– not only to the daily market but also to the futures market, which is more stable. Specifically, it is established that the part that corresponds to the futures market is formed in 10% with the monthly product, 36% with the quarterly product and 54% with the annual product. The change will not be sudden, but progressiveso that the forward market reference represents the 25% of the price in 2023, 40% in 2024 and 55% in 2025.
In fact, the Government wants to approve the standard before July to give the electric companies six months to buy the energy in the futures market, according to sources from the Ministry for the Ecological Transition. And in this way it can be launched at the beginning of 2024. This mechanism implies less volatile pricesbut not necessarily cheaper. Thus, according to both the CNMC in its report and the Government in the economic memory of the previous royal decree law, in a scenario of price spikes like last year, this rate would smooth the incrementsbut in a stable scenario –as had been customary before the war– could mean a raise.
European Comission
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In the context of the discussions between European Commission and Spain and Portugal to implement the cap on the price of gas, Spain informed Brussels of its intention to reform the regulated electricity tariff in order to reduce your dependency on evolution of the daily market. This does not imply, as was thought at first, that the European Commission forces the Spanish Executive to make these changes.
If there is no change of plans and Spain approves the new rate before the end of June with effect from January 1, 2024, the New rate would enter into force once the new extension of the gas cap ends on December 31.