The price of electricity maintains its stable trend from last week. Tomorrow, March 15, the megawatt will be paid at 249.66 euros on average. Practically the same price as this Monday. The price difference between the sections lies in the tolls and charges, which are higher at the peak, intermediate in the flat, and more affordable in the off-peak period. This March 15, the megawatt will be paid at peak times (charges and tolls included) at 311.71 euros and at 209.79 euros/MWh at off-peak times. The cheapest section will be recorded between X hours.
The price of electricity, despite being far from its historical maximum reached on March 8 with 544 euros, is at very high levels and an imminent drop is not expected. Russia’s invasion of Ukraine is one of those factors that will keep the price of a megawatt at record figures in the coming months.
The escalation in the prices of the electricity bill has been a constant for months, although February was a respite. The beginning of March came with a scare. In just a few days, prices reached historical highs but soon returned to the path of the month of February between 200 and 300 euros per megawatt.
The energy market continues at excessively high levels that represent a severe setback for families. The more than 10.5 million households benefiting from the regulated electricity tariff that are receiving electricity bills for February these days are once again aware of the high prices at which they are paying for this basic supply. The average receipt of the PVPC (Voluntary Price of the Small Consumer), which until 2021 rarely exceeded 60 euros per month, has increased beyond 130 euros, on average, according to calculations by the National Commission of Markets and the Competition (CNMC). And the spiral will go further, according to how the wholesale market behaves in this new energy crisis derived from Russia’s invasion of Ukraine.
Gas, one of the main culprits in the unprecedented energy crisis in Spain, continues to set the tone for electricity prices. It was the first source of generation in the first fortnight of February, thanks to the persistent anticyclonic situation in Spain, which according to the ASE Group contributed to a 371% increase in electricity production from combined cycles.
Europe has also been affected by the escalation in prices. In that first half of February, only Italy, with 212.66 euros megawatt hour (MWh), registered prices higher than those of Spain. The price escalation began a year ago, when the ‘pool’ marked an average of €28.50/Mwh, and reached its peak in December, with 239 euros per megawatt hour. The beginning of the year has moderated prices a bit (€201/Mwh in January) but even so they remain extraordinarily high. And the worst thing is that the futures market, which anticipates the behavior of the electricity market in the coming months, continues without showing signs of change until at least the second quarter of 2023.
The regulated rate, the main affected
High electricity prices directly affect users of the regulated rate, the so-called Voluntary Price for Small Consumers (PVPC). This mode of supply is configured with the prices of the wholesale electricity market (‘pool’) plus tolls and charges, which represent the regulated invoice of the receipt and are set by the National Commission of Markets and Competition (CNMC) and the Ministry Ecological Transition respectively.
The former are used to finance the transport and distribution of electricity. With the charges, other concepts are paid, such as incentives for renewable energies, part of the costs of bringing energy to the islands, or the amortization of the tariff deficit. However, consumers in the free market -in which a price is agreed with the marketer on duty for a certain period of time- are also affected by this inflationary spiral of electricity when it comes to renewing their contracts.
New price structure from June 1
The increase in the price of the electricity market began in early 2021, months before the new rate structure came into force. This price scheme established for domestic consumers two periods of contracted power (peak and off-peak) and three energy periods (peak, flat and off-peak). The price difference between the sections lies in the tolls and charges, which are higher at the peak, intermediate in the flat, and more affordable in the off-peak period.
With these changes, it was intended to shift consumption to times when energy demand is lower, to avoid an overload of the networks that would have led to a greater investment in these infrastructures, with the consequent increase in the cost of the bill.
However, the skyrocketing prices in the electricity market forced the Government to take a series of measures to lower the price of the bill, which were applied between September 1 and December 31: the reduction in the cost of charges -which affected both prices both energy and contracted power-, the reduction of the Electricity Tax from 5.11% to 0.5% and the VAT, which went from 21% to 10%. In addition, the suspension of the tax on electricity generation (7%) was extended until the end of the year.
These changes meant that, in practice, the price curve between the different time slots was flattened so that there was hardly any difference between consuming during one or the other. However, the beginning of the year brought the usual review of the regulated part of the electricity bill. The tolls decreased by 4.6% compared to those applied since June 1 with the change in the electricity rate.
As for the charges, the discount approved on September 1 disappeared, but the amount of the new ones is approximately 33% lower than those of April 2021. On the other hand, the Government decided to extend the reductions of the two taxes included in the invoice (VAT and Electricity) and the electricity generation bill (the IVPEE) until April 30 of this year.
January, second most expensive receipt in history
These modifications have not had a positive impact on the receipt. Without going any further, January was the second most expensive in history. According to the Organization of Consumers and Users (OCU), the bill for that month for households with a regulated rate -taking into account a contracted power of 4.6 kW and a monthly consumption of 292 kWh- reached 111.64 euros.
The price per kilowatt hour (kWh) consumed at the regulated rate has not stopped growing in recent months, with the exception of November, which is cheaper than October. According to the calculations of the OCU, in January the kilowatt was paid at rush hour (charges and tolls included) at 0.379751 euros, at 0.291824 in the plain and 0.252581 in the valley.
Tips to lower the receipt
Getting a cheaper bill involves changing a series of habits. The first of these, consume as much as possible within the valley sections (from 12:00 a.m. to 8:00 a.m. from Monday to Friday and all hours of the weekend). It is also interesting to adjust the contracted power as much as possible, because many times you have more than what is actually used.
Before the generalization of digital meters, it was almost impossible for a domestic user to know how much electrical power he used. But with new measurement devices, everyone can access that data. The distributors -the owners of the ‘cable’ through which electricity reaches the point of consumption- already offer this information on their web pages and mobile applications. In Euskadi it can be done through the i-DE website, the name with which Iberdrola has baptized its distributor.
Another way to lower your electric bill is to use appliances efficiently. For example, choosing programs that work at low temperatures in the washing machine or dishwasher, turning off the electric plates or the oven before the end of the cooking time to take advantage of the residual heat, or eliminating the ‘stand by’ to turn off completely the devices.