The electricity price closed February at an average of less than 42 euros per megawatt/hour, the lowest price in three years. However, due to the VAT increase, an average annual invoice for an average customer will increase from 467 euros to 539 euros per year.
The electricity price closed February on average lower than 42 euros per megawatt/hourthe lowest price in three years, meaning electricity will again be taxed at 21% VAT in March, compared to 10% so far.
The impact of increasing value added tax (VAT) from 10% to 21% means that an average annual customer bill will 15% increaseto go from 467 euros to 539 euros per yearaccording to sector data.
Within a year, end consumers could even see their electricity bills rise 25% (117 euros more per year) due to the increase in taxes, sector calculations show.
The electricity price on the wholesale market was particularly low in February, thanks to the intense weather in February Sun and especially inside windof many hours where the costs were zero and with average daily prices that did not exceed ten euros in the past week.
The average electricity price in the ‘swimming pool’ ended February very close to 41,245 euros per MWhcompared to 132.7 a year ago, or 74 last January.
It is about cheapest month since February 2021, when the average price on the wholesale market was 28.5 euros. A month later, in March, the average price was 44.45 euros and from then on the price of electricity began to rise, reaching an all-time high in March 2022, which coincided with the start of the Russian offensive in Ukraine.
Last Wednesday the electricity was one 92.9% cheaper than a year agowhen an average of 132.68 euros/MWh was paid, a price higher than the annual maximum reached so far in 2024, at 113.83 euros/MWh.
Two months ago the The Spanish government has extended the tax cut in the electricity bill that went up as a result of the price increase that occurred after the start of the Russian offensive against Ukraine, which ended just two years ago.
According to the rule, VAT on electricity would go from the 5% that applied at the time to 10% and remain there for the entire year of 2024. the caveat has been added that when the arithmetic average price of the daily market corresponding to the last calendar month preceding the last day of the billing period was less than 45 euros per MWh.
The VAT increase will apply for all types of contracts of electricity, although consumers on open market contracts are expected to be the most affected – mostly on fixed tariffs, as those on regulated tariffs – including the lowest incomes and large families – will see this increase offset by low prices .
Source: EITB
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.
