Endesa and Iberdrola ask to reform the regulated electricity tariff in the face of price escalation



Endesa and Iberdrola call on the Government to reform the regulated electricity tariff for light, the so-called voluntary small consumer price (PVPC), to “protect” the consumer from increases in the wholesale electricity market, to which it is indexed.

The CEO of Endesa, José Bogas, demanded this Tuesday a “reform” of that rate to “protect domestic customers from market volatility.” The PVPC, which can be used by consumers with up to 10 contracted kilowatts, has its prices directly indexed to those set by the pool every hour, which last week set a daily record of 106.57 euros per megawatt hour and is at maximum historical due to the increase in the cost of natural gas and CO2 emission rights

Bogas has emphasized that “the situation of the energy market in Spain, with the strong increase in prices in the wholesale market, is not benefiting electricity companies such as Endesa, since we have sold energy to customers at prices lower than those set by the pool ”.

Endesa, which has to contract part of the energy it supplies to third parties, announced on Tuesday a profit of 832 million until June, 26% less, affected by the rise in gas prices and the market situation. The utility has reaffirmed its goals for 2021.

Bogas’ request comes after on Monday, the CEO of Iberdrola Spain, Ángeles Santamaría, spoke in similar terms in a interview in Cinco Días and demand changes to “make the design of the PVPC rate more stable.”

“It doesn’t bring us anything good”

Santamaría recalled that this rate “is by law linked to the hourly market prices, so that any rise and fall is transferred to the consumer, who is the one with the least capacity to manage their consumption. As a consumer, I would like to have some predictability of what my electricity is going to cost me and not be worried about whether it goes up or down. In other countries such as the United Kingdom, reference is made to a basket of installment markets and the price is more or less fixed for three / six months or a year, so there is no continuous shock and this current alarm, and it provides certainty ”.

In the opinion of the Iberdrola executive, “the design of the PVPC is a problem, it worries you not knowing what you are going to spend, being connected to a market that you neither understand nor have to understand.” “I would say that our regulated tariff is unique in Europe and does not bring us anything good,” said Santamaría, who proposed “solutions of similar design to other countries such as Italy or the United Kingdom, or to provide energy to this type of consumer with contracts with technologies that can give stable prices and are competitive, such as nuclear power plants ”.

The current system of regulated hourly prices indexed to the pool it was implanted in the time of the PP, after another upward price spike that led then Minister José Manuel Soria to bury the previous mechanism, based on a quarterly auction.

The spectacular escalation of the market in recent weeks has led the current minister of the sector, Teresa Ribera, to request by letter to the European Commission that modifications be allowed in the design of the current marginalist model, for which the most expensive offer determines what charged by all technologies in the appeal. Ribera has also proposed to cut the excess remuneration of hydroelectric and nuclear due to the increase in the cost of emission rights.

Despite being more exposed to these increases, the PVPC is the option most recommended by experts, the Government, consumer associations and the National Markets and Competition Commission (CNMC). In the long run, it is the option that most compensates users, because it is cheaper than the free market offers promoted by electricity companies, with higher margins for them. The PVPC has been in decline for years. In February (latest data available), 10.6 million supplies had received it, compared to the 16.2 million that were on the free market.

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