Over the past year, gas and electricity prices have reached unprecedented heights. The regulated prices of both markets have produced different results for Spanish retail customers
As in the rest of the EU countries, in Spain there are two types of activities in the energy sector: regulated and free.
Infrastructures operated under a monopoly regime (gas pipelines, electricity grids) are regulated, and those related to the generation of electricity and the sale of natural gas and electricity are free.
The rates of last resort are maximum prices set by the Administration for certain consumers, for whom the supply is understood as a universal service.
These tariffs are offered “by the trading companies on which such an obligation is imposed, which must carry out the activity with separate accounts, differentiated from the free supply activity.”
The Last Resort Rates (TUR) came into effect on July 1, 2009 and are still referred to as such for natural gas. For electricity supply, they changed their name on April 1, 2014 to Voluntary Price for Small Consumers (PVPC).
The National Markets and Competition Commission (CNMC) is the body responsible for promoting and maintaining the proper functioning of energy marketing, in the interest of consumers. In the household survey that the CNMC prepares every semester, the great ignorance of Spanish consumers about the types of energy contracts offered by the market stands out.
There are currently three last resort rates, depending on the customer’s annual consumption:
-TUR.1 for consumption lower than or equal to 5,000 kWh/year. This consumption range is typical for a home with a kitchen and a natural gas water heater.
-TUR.2 for consumption higher than 5,000 kWh/year and lower than or equal to 15,000 kWh/year. This consumption range is typical for a home with natural gas heating.
-TUR.3 for consumption greater than 15,000 kWh/year and less than or equal to 50,000 kWh/year.
The structure of the invoice is identical in all respects and consists of five terms:
1. Fixed term
2. Variable term
3. Tax on hydrocarbons
4. Meter rental
5. Value Added Tax (VAT)
All prices and tax rates are determined by the Administration. Prices for fixed and variable terms are reviewed quarterly; the rest, annually. The VAT has been set at 5% from 1 October 2022.
The bill of a consumer with a free contract initially has the same structure as that of a TUR: the prices of the fixed and variable term are free and the rest are the same regulated values of TUR corresponding to their level of consumption. In addition, the invoice may have a different term, which is determined by the parties in mutual consultation.
Normally, the validity period of free contracts is one year.
The comparison of both types of contracts, regulated and free, can be done directly by the consumer using the CNMC comparator.
Currently, the high gas price is reflected in a very high price of the variable term of the free bill, about double the regulated price, as the administration has limited the maximum increase in the cost of the gas per revision to a maximum of 1 January 2022. 15%.
Out of a total of just over a hundred marketers, four regulated marketers are authorized by the administration, supplying natural gas to 1.5 million customers out of a total of 9 million.
To access the PVPC tariff, the consumer must be connected to a voltage of up to 1 kV and have a power of up to 10 kW.
The structure of the PVPC invoice consists of five terms:
1. Fixed term
2. Variable term
3. Electricity Tax
4. Meter rental
5. Value Added Tax (VAT)
The price of the variable term is determined per hourly based on the result of the electricity market. The other prices and tax rates are determined annually by the Administration. The VAT has been set at 5% from 1 July 2022.
Vulnerable consumers can take advantage of the electricity social bonus, which entails a discount on the regulated bill, a possibility that free contracting does not have.
The volatility of the hourly price, accentuated for a year by the lack of control over the gas price (on the same day in September, the PVPC price in the most expensive hour was more than seven times that of the cheapest hour), inconvenient for many consumers who prefer more stable or even fixed prices.
The government has committed to reforming the PVPC by January 1, 2023 and introducing forward price references that moderate its volatility.
The invoice of a consumer with a free contract initially has the same structure as that of a PVPC. The fixed and variable term prices are free and the rest of the prices and taxes are the same regulated values of the PVPC. In addition, the invoice may have a different term, which is determined by the parties in mutual consultation.
Normally, the validity period of free contracts is one year.
The comparison of both contract forms is much more complex than with natural gas. It can certainly be done by the consumer himself using the CNMC comparator (since October 2021 a QR code has been inserted into the invoice that connects directly to the comparator). However, the wide variety of free offers and, more recently, the application of the ceiling on the gas price in the electricity market, make it difficult for electricity consumers to make a decision.
Out of a total of just over three hundred marketers, eight regulated marketers are authorized by the administration, supplying electricity to 9 million customers out of a total of 29 million.
This article was published in ‘Het Gesprek’.
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.
