Users with free tariffs whose free contract expires assume the adjustment of the Iberian limit, which reaches 20 cents per kWh
As if there were no shortage of twists and turns in the electricity bill, more and more houses are taking on a new concept whose impact is not trivial. The amount is high in many cases. And to twist the loop even more, the name is not the same in every company. The new heading that is spreading in all receipts is the compensation to be paid to gas companies for the cap on the gas price that the European Commission granted Spain in June. In a few words, it is a question of paying the companies that use gas to produce electricity the difference between the ceiling price permitted by Brussels (between 40 and 50 euros/MWh) and the real cost price of that raw material, which is approximately 200 euros/MWh. Mwh. A kind of deferred payment distributed among all consumers that compensates for the limitation of the cost of electricity that they ‘enjoy’ with the Iberian exception.
The implementation of the Iberian cap made it possible to have a lower price for power generation than in the rest of Europe. In Spain and Portugal, it was up to three times lower than that of countries like Italy or France, or twice that of Germany. Since June 15, when it was launched, the Spanish ‘pool’ has been around 146 euros/MWh, much lower than the Italians’ 450 euros, the 410 French euros or the 360 German euros. However, that difference is difficult. Because to the 146 euros in Spain we have to add the compensation to be paid to the gas companies via the electricity bill.
In the Ministry of Ecological Transition, they clarify that, despite this compensation, the final result of the electricity price is more favorable for Spain compared to the previous system, when the Iberian limit was not applied. They estimate an average saving of 2,600 million euros for Spanish electricity consumers, with a reduction of 17 euros per bill per month compared to what would have been paid without the mechanism.
And who pays that difference between the real and the limited price? All consumers. To narrow it down a bit more, households will pay it bit by bit as the months go by until May 31, 2023. The first to start paying it were the 10 million users who are in the regulated tariff market (the PVPC). Since June 15, these customers have allowed their companies to add the extra costs of gas compensation on all their invoices. These users have already seen how this new concept was incorporated into their bills: in the cost of electricity they paid an amount lower than what they could have paid without the Iberian limit (for example 0.30 euros/kwh compared to another who could have paid) would have been higher); but then a surcharge is included (also in euros/kwh). That cost started in June at around 0.12 euros/kwh, but increased to 0.20 euros/kwh in September, when gas prices skyrocketed.
More and more users with a fairly competitive rate are surprised that their company also includes this new levy. Because as the months go by, the contracts that these households had concluded with their electricity company expire, usually with a term of one year. When it comes time to renew that rate, or if the user decides to move to another company where they found a better offer, the gas adjustment is also applied.
The goal is that by the end of May of next year, the more than 28 million stocks across Spain will pay for the imbalance in the cost of gas. The Ecological Transition estimate is that the more consumers are engaged to pay the fee as it matches them when their contract expires, the lower the cost will be, as more and more households assume.
Its evolution will depend not only on the number of users added, but also on the price of natural gas on the international markets. The outlook for the coming months is not encouraging, so the distribution of electricity costs will certainly remain high until the first half of next year.
When choosing a new electricity tariff, you should always take into account that for the price they offer you (the euros per kWh charged), you must add the gas adjustment, the amount of which may vary, although on average in the first months of operation of the Iberian cap is between 0.12 and 0.20 euros per kWh consumed.
This Saturday the month of October was launched with the promised VAT reduction from 21% to 5% on the natural gas bill. With this measure, the new increase in the gas price, which has even risen by an average of 10%, can be absorbed. Although with the new reduced VAT, the bill will fall by 7.2% compared to the data of the last revision, last July.
Users will benefit from this measure, although the increase in raw materials could eat up a large part of the discount that the VAT reduction brings on each voucher. With winter in mind, when heating or hot water use is higher than the rest of the year, many consumers wonder what the best possible rate is.
There are also two variables on the gas market: the regulated tariff (called TUR) and the multiple free tariffs. The regulated company has been limited in the increases it is expected to make since November last year. Specifically, the increase to 4.3% was achieved, compared to more than 130% that could have increased if the aftermath of the gas market had followed. In the spring of the revisions of April 1 and July 1, the Board decided to maintain the limit of 15% on the maximum increase in raw material costs in the TUR calculation formula, with the intention of limiting its effect on the final settlement.
If this rate is compared to one of the free market rates, the regulated rate is still the most competitive, something that doesn’t always happen with the regulated electricity rate (PVPC), which has more ups and downs.
However, the majority of Spanish consumers opt for free gas market tariffs: 80.1% were on the free market until March 2022 compared to 19.9% on the regulated market, according to the National Commission of Markets and Competition (CNMC) . In other words, of the nearly 8 million natural gas users, about 6.5 million have a free tariff and 1.5 million in the TUR.
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.
