The Spanish government is preparing a new system to calculate the regulated price of electricity

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The Spanish government’s calculations suggest that this new formula, which will be publicly consulted until November 7, would reduce interest rate volatility by up to a third.

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The Spanish government is preparing a new system to calculate the regulated electricity tariff known as PVPC, which is usually used by the most vulnerable users and large families, to try to prevent the increases from being as abrupt as they have been in recent months.

As reported on Wednesday by the Ministry for the Ecological Transition and the Democratic Challenge, the Spanish government wants, instead of setting a price based on a specific day, to take three different time references: one month, one quarter and one with the annual average.

These references will be weighted differently (10% monthly, 36% quarterly and 54% annually) to calculate the averages, so that the annual average will weigh more, which makes it possible to keep the resulting price stable and smooth out its fluctuations .

The Spanish Government’s calculations show that this new formula, which will be subject to public consultation until the following day, November 7thwould reduce interest rate volatility by up to a third.

So while the difference between the cheapest and most expensive price is now 27% during the day, with the new system that percentage would be reduced to 17%while the monthly difference would go from the current 23% to 16%.

The regulated tariff, to which 35% of consumers in the country are subject -nine million-, is indexed to the daily prices recorded on the Iberian Electricity Market (MIBEL), exposing consumers to possible variations, as has happened since the Russian invasion of Ukraine began.

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Source: EITB

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