July’s bill was the third most expensive in history, though government measures prevent it from rising any further
Gas, electricity, water and food. Spanish families are still drowning in an avalanche of bills that have already led to changes in usual consumption habits. A shift that the Bank of Spain has more clearly detected in vulnerable households, warning that many of them are being forced to cut items from their daily budget to accommodate the escalation of energy.
The fiscal measures taken by the government to reduce these costs have succeeded in limiting the impact of the runaway prices on the wholesale market. But far from it, they haven’t completely wiped out the energy wound that families have suffered for months.
According to calculations by the Organization of Consumers and Users (OCU), the average electricity bill, calculated on an average consumption of 3,500 kilowatts (kw)/year with a capacity of 4.6 kW, amounted to 115.27 euros in July. It is the third most expensive bill in history, after March this year (EUR 143.03) and December 2021 (EUR 119.17). And it is just over 43 euros more than in July last year, when consumers paid an average of 72 euros.
Twelve months of energy chaos since then, only four of them with average bills less than 100 euros: August, September and November 2021; and May of this year, when the coupon was 98.8 euros. In between, a wave of fiscal measures has been noted to help ease the wallet, including the reduction of the VAT on electricity from 21% to 10% -and now to 5%-, in addition to the reduction of the Special Tax on Electricity or the suspension of the responsible for production.
The potential beneficiaries of the social bond for electricity have also expanded and an energy-saving plan has been launched that has reduced the country’s consumption by 9.5% in the second week of operation, as explained yesterday by the Director General of the Institute for Diversification and Energy Savings (IDAE), Joan Groizard.
However, the government’s most important measure has been the gas cap that the government hopes will cut consumer bills by between 15% and 20%. At the moment, the so-called “Iberian exception” has managed to contain to a certain extent the increases in energy prices in the wholesale markets of Spain and Portugal compared to what happened in other countries such as Germany or France, where they are still knock maximum after maximum.
For the time being, however, the plan has not led to a significant decrease in the bill. “It’s a moderation of the increase rather than a decrease as such as prices have continued to rise,” they explain from OCU.
This is partly because the introduction of the mechanism since mid-June coincided with several heat waves and completely runaway gas prices. And when the actual gas costs exceed the 40 Euro/MWh set as the ceiling for the first six months of the measure, the companies that have to activate the combined cycle installations to meet the full demand will have to be compensated. So the more expensive the gas is and the more quantity used to produce it, the higher this fee will be.
According to the regulations, its cost is divided among all users of the regulated market (PVPC) and the free market contracts are indexed to the wholesaler. The rate also applies to all permanent contracts that are extended between April 26 and May 31, 2023.
So, since these customers are included, the total cost will be lower as it will be spread over a larger number of consumers. But futures market data expects August to be difficult for households. With gas hitting new heights in the face of a new threat of power cuts, the average price of electricity is set to rise 35% this Tuesday to EUR 365.33 MWh, according to data from operator OMIE.
That figure is the result of adding the auction average to the compensation for the fuel cap. It is the highest level since the measure came into force, but without it, the electricity price in Spain would be EUR 476.76/MWh. That is 111.43 euros more than with the compensation.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
