The regulated electricity tariff changes its methodology in order to dampen the volatility of the spot market, the real-time market. The calculation methodology establishes that, in addition to taking into account the daily price, monthly, quarterly and annual quoted prices will be taken into account. The aim of this new tariff is to protect consumers from the price instability that has been occurring since 2022, when prices soared due to the energy crisis and the Russian invasion of Ukraine.
This reform was one of the commitments with the European Union to apply the "Iberian derogation", a temporary measure to combat the rise in electricity prices due to the increase in gas prices, which consists of limiting the cost of electricity generated with gas. Although it was to be applied at the beginning of 2023, it is only now that the new calculation method has been established and will be applied on January 1, 2024.
It is worth remembering that 9 million households are currently covered by the regulated tariff, which accounts for 34% of domestic supplies.
What was the regulated tariff like until now?
The regulated electricity tariff or Voluntary Price for Small Consumers (PVPC) was introduced in 2014 and is applied by reference marketers based on three concepts: the cost of electricity, network access tolls, system charges and the cost of marketing.
The cost of energy changes The regulated electricity tariff or PVPC is fully indexed to the daily electricity market, i.e. it changes every hour of every day. The price of electricity varies depending on several factors, such as weather conditions, increase in demand, hydrology, etc. In addition, as it is applied to each consumption, the price of the hour in which it is made depends on when it is consumed.
How is the new regulated electricity tariff calculated?
To avoid this volatility, the government has established a new calculation system. With the new system, electricity will no longer be subject only to the daily electricity price, which is mainly responsible for price volatility. From 2024 onwards, the price composition will include quotes of future values of the previous semester: monthly, quarterly and annual.
The implementation of future values in the calculation of the energy value will be done progressively: in 2024, they will represent 25%, in 2025 40% and in 2026 55% of the electric energy production costs. Of these percentages, 10% will correspond to the monthly product, 36% quarterly and 54% annually.
This price will be more stable but not always more economical.
This new calculation methodology does not necessarily imply a decrease or an increase in the bill, but it does imply a greater stability of the bill. Exceptional situations that have a direct impact on the price, such as those that have occurred in recent years, will not be directly reflected in the electricity bill. Downward energy price scenarios, such as those we are currently facing, will mean that the regulated tariff price will be higher. Upward scenarios will mean that the regulated tariff will be cheaper.
Who is eligible for the PVPC?
As of January 1, 2024, holders of supply points who are individuals or micro-enterprises with a power less than or equal to 10 kW in each of the existing hourly periods will be eligible for the voluntary prices for small consumers.
The microenterprise requirements are those set forth in EU Commission Regulation No. 651/2014. Microenterprises are those companies that employ less than ten people and have an annual turnover with an annual balance sheet total not exceeding €2 M.