June 15, 2021

The Government admits that the new electricity rate that will take effect in June will not lower the price of the bill

The Government recognizes that the new electricity bill that will take effect in June will not make electricity cheaper in the short term. Sources from the Ministry for the Ecological Transition and the Demographic Challenge trust in a “certain reduction” of the average bill after its launch, but warn that the system “does not seek to reduce the price of electricity immediately”, but to give ” adequate signals ”to achieve“ more efficient ”consumptions and encourage the deployment of self-consumption and the electric car.

The Government postpones the entry into force of the new electricity bill until June

The Government postpones the entry into force of the new electricity bill until June

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The ministry is going to launch a “massive” campaign to explain the new bill, which will take effect on June 1 after several postponements. This will give greater weight to the energy consumed in the final bill and will be based on three billing periods (peak, flat and valley) for the fixed part of the bill of the 10.7 million domestic users covered by the Voluntary Price for Small Consumer (PVPC).

This semi-regulated rate is the one most recommended by experts despite the fact that it has been in decline for years and there are now 16 million households benefiting from free market rates, which are generally more expensive. In the latter case, customers must analyze what contract they have with their marketer.

The new structure applies price discrimination to all consumers and three periods to all those with less than 15 kW (domestic consumers) for users with PVPC. The peak period, with the most expensive tolls and charges, and which will go from 10 am to 2 pm and from 6 pm to 10 pm on weekdays; the plain, with an intermediate cost (from 8 to 10 hours; from 14 to 18 hours; and between 22 and 24 hours); and the valley rate, the cheapest, which will run from midnight to 8 in the morning and will apply all hours on weekends and holidays.

Since June, access tolls to the electricity sector have been replaced by two new concepts: on the one hand, tolls, which are set by the National Markets and Competition Commission (CNMC) and which cover the costs of using the networks transportation and distribution; and on the other, the charges, established by the ministry and which are covered by the so-called special regime (which includes the premiums for the oldest renewables), the tariff deficit from previous years or the compensation of 50% of the extra cost of generating electricity outside of the peninsula.

With the new system, the invoice format for users with PVPC also changes. This will be shorter (two pages) and will incorporate new information such as the maximum powers that each consumer has demanded in each of the time periods in the last year, to adapt to the new system. A QR code will also be included to access the CNMC’s energy offer comparator.

“Simplicity” and “balance”

Government sources indicate that with this new system the simplicity of the invoice is “reasonably maintained” and a “reasonable balance” is achieved with the previous model, maintaining a certain fixed component to guarantee that the collection objective is met to cover the fixed costs. of the electrical system.

The Executive entrusts the reduction of the receipt not to this new invoice, but to the fund you have raised to get the cost of renewables from the receipt and charge it to the whole energy sector, already bilateral contracting through mechanisms such as PPAs of renewable energies. The Executive acknowledges that he is “concerned” by the rise experienced by the wholesale price of electricity during April, which made, according to Facua, last month it closed with the most expensive domestic bill in history and the highest in more than two years.

A situation that is explained by the rise in the price of natural gas and CO2 emission rights and in the face of which the Government says it has little margin, recalls that the carbon market has a European dimension and any measure to stop the rise in rights emission (they have doubled in just a few months, up to 50 euros per ton) has to be adopted at the community level.

Through the new tariff structure, it is intended to encourage the transfer of electricity consumption from the hours of maximum electricity demand (peak hours) to others in which the transmission and distribution networks are less saturated (off-peak hours), which will reduce the need to carry out new investments in said infrastructures.

“This results in lower costs for electricity consumers, since they are the ones who pay for this type of infrastructure through the electricity bill, and avoid the environmental inconveniences of this type of facility,” explains the ministry.

Users who move their consumption to the flat and valley hours, with less demand, will have greater savings on their bill. Those affected will probably be the 1.1 million customers with PVPC who were already benefiting from the so-called hourly discrimination, which the new tariff periods will penalize them.

Consumers will be able to contract two different powers: one for the peak and flat periods and another for the off-peak period. Those who need more power in the valley period, such as users with an electric vehicle who wish to charge it at night at home, will be able to contract a higher power for the valley period and maintain their usual power in the peak and flat sections, avoiding paying the extra cost of that extra power at all hours of the day. If the consumer does not request this change, the current power contracted in both periods will be automatically applied.

The combination of the new tolls and charges will make the electricity bill have a greater variable component. This will make its cost more dependent on the energy consumed, which encourages energy efficiency and promotes self-consumption, which reduces the demand for energy from the grid, or the deployment of infrastructures for rapid recharging of electric vehicles.

The ministry emphasizes that this new model will also benefit consumption with a seasonal component such as tourism. However, the new model will keep a fixed portion of the charges to strike a balance with other energy policy priorities. In this way, the incentive for the electrification of energy end uses remains, which encourages, for example, the use of heat pumps, which could be cheaper and cleaner than other options based on fossil fuels, or the domestic recharging of vehicles. electrical


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