Faced with the constant increases in the bill, users opt for flat rates and forget the bands that were activated a year ago
Iron at sunrise or turn on the washing machine at midnight. It was the advice that the Ministry of Ecological Transition renewed just a year ago, when the system of electrical schemes was launched that caused more than one headache for many households, who were not used to adjusting their electricity consumption to the time of day when they comply. 365 days later, everything has changed on the electricity bill. Nobody expected a price hike like the one that happened in Spain, nor the threat of austerity, nor the hoaxes about possible power outages, nor the invasion of Ukraine, nor the electricity record in March, nor the limit for gas to come
In this last year, light has become the protagonist in family conversations, between acquaintances and in political disputes. Javier Bescos, Director of Innovation Regulation at Fenie Energía, explains that we have changed “from users looking at their bills once a year to users looking at the price of energy every hour.” And that “had a lot to do with their habits,” admits this expert. However, he believes that “all this effect collapsed with the rise in prices.”
Because the consecutive records of the daily generation market have given no respite and have overrun that measure. At the end of last summer, costs were already above 150 euros/MWh in August, compared to 70 euros/MWh at the beginning of June, and the government launched the first package of measures to deal with the price crisis: a 90% cut in the bill. This is the fixed portion that all customers pay into their bill, for which the old renewable energy is paid, the electricity shortage is paid for or insularity is compensated.
From June 1, 2021, the rates have been significantly increased between 10 a.m. and 2 p.m. and between 6 p.m. and 10 p.m.; between, noon and night; and they were hardly applied at sunrise. And the weekends. By lowering them in September, even with time differences, these reductions were no longer so evident for households. Later, in January, they increased, but never returned to their original state. And the same thing happened on April 1 with the latest anti-crisis package, increasing the receipt costs, but not to the amounts they had on June 1 last year, when there were big differences between time periods. Now the washing machine at night is no longer as cheap as in the afternoon or in the morning. Although you can always save some euros.
From the National Commission of Markets and Competition (CNMC), they state that “changes have been appreciated, but it is impossible to determine whether the changes detected are due to the price signal from tolls and charges (which has been reduced, but has not disappeared), the rise in market prices (which has made consumers more aware of their consumption) or the economic and geopolitical context. In other words, few users today take that system into account. Antonio Delgado, CEO of Aleasoft, notes that “changes are seen with a decline in the morning peak and a slight increase in the early morning valley.” But he concludes that “with the price increases, this is no longer a consumer priority.”
The accumulation of circumstances that have shaped electricity bills over the past year has further entangled the string in which users have moved before this price crisis. Another problem was that in many cases no more invoices were received. In recent months, some of the households that used to have their receipt every month have seen their marketers not send them that information.
The problem has arisen due to the lack of a connection between the distribution company – which is responsible for monitoring the meters – and the marketer – with whom the customer has contracted electricity – in the midst of a major price crisis. This issue has been resolved, although there are still contracts piling up for several months without consumption information and thus without being billed monthly, as usual.
The other major change that the system has undergone is the massive shift of customers from the regulated market to the free market. More than 1.2 million users took that step last year, especially after electricity prices skyrocketed over the summer. In recent months, the trading practice of offering fixed prices 24 hours a day, seven days a week has spread. And so consumption in the hours of lowest demand in the system – nights and weekends – is once again discouraged, as the timeslots intended.
There are already 19.8 million delivery points on the free market compared to 10 million on the regulated market, the historical minimum. This means that they already represent less than 33% of the total, compared to 40% until a year ago.
At the background of this question are the characteristics that determine the regulated tariff in Spain, a model unique in all of Europe. On the one hand, because it is an electricity contract that is directly linked to the wholesale price of electricity. “It works as if the price of the bus ticket is linked to the daily cost of oil,” explains Luis del Barrio of Arthur D. Little. One of its main features is that it is the only rate that gives access to the social bonus (the discount of up to 70% for vulnerable households).
The change was also accompanied by a substantial increase in customers of major companies (Iberdrola, Endesa, Naturgy and Repsol), who managed to increase the number of active contracts in the first quarter of the year. They have done this in light of the loss of customers of medium, small or independent companies, in their case almost all with fewer users than at the end of 2021. These companies believe that the Executive should force the large companies to sell some of their cheap energy they produce to the independents.
More than three weeks have passed since Spain and Portugal presented their proposal to Brussels to limit the price of gas on the daily market and the European Commission has not yet given a signal to approve this measure.
It is about the hope that the government will have to moderate the increase in electricity, the price increase and thus the inflation rate for the coming months. The best prospects expect the regulated market’s average bill could fall between 15% and 20% compared to the current one.
The limit on gas, which will be in force for a whole year, is accompanied by an almost inexorable promise to Brussels: to have the general rules of the regulated tariff ready before 1 October (Voluntary Price for Small Consumers, PVPC ). Although the government predicts that these changes will not formally take effect until “early 2023”, the college will already have to make “the necessary adjustments” by next fall to highlight a “new calculation method”. It will be less volatile. Both uphill and downhill.
All estimates indicate that electricity prices will remain expensive in the medium term. Carlos Solé, partner responsible for energy and natural resources at KPMG in Spain, explains that “the evolution will be determined by the price level of natural gas as a marginal technology, the cost of CO2 allowances and the decisions that can be imposed from energy policy. What he notes is that “the outlook for 2023 and 2024 continues to show an upward trend and shows high volatility.” In that sense, Antonio Delgado, CEO of Aleasoft says: “The price situation, with many opportunities, will only be after next winter. improve”.
Meanwhile, the electricity mix will gradually incorporate renewables, which could drive prices down. But the gas cycles are essential to meet all the light demands of the system in the medium and long term.
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.
