The electricity companies have redoubled requests to the Government to reform the voluntary price for small consumers (PVPC), the semi-regulated electricity tariff in which the cost of energy is directly indexed to the price of the wholesale market. This Thursday the pool will break the umpteenth record so far this year for the maximums in the price of natural gas and CO2 emission rights. And the large companies in the electricity sector urge to look to Portugal, where rates are set annually.
The PP canon that will have to be returned to the electricity companies exceeds the Castor hole: more than 1,624 million
This Wednesday, the CEO of Iberdrola Spain, Ángeles Santamaría, insisted during a conference organized by El Economista on demanding an “urgent reform” of the PVPC: as designed, it “completely transfers the price of the wholesale market” to the consumer and this is a topic “source of media scandal” that is “in the openings of news and information.”
The “problem” with PVPC is that “it is linked to the wholesale price,” insisted the CEO of Endesa, José Bogas, who, like Santamaría, cited the “example” of Portugal: with its wholesale electricity market integrated with the Spanish, “Portuguese customers are not worried” about the pool records because “they have an annual fee that was formed before and they have not been affected” by this escalation.
In the neighboring country, which this Wednesday had breakfast with the sudden death at 56 of Cristina Portugal, the president of the energy regulator (ERSE), the daily records of the pool are not, in fact, daily on the front pages of the media. There the rates are set annually, as I remembered a few days ago the person in charge of this matter and Minister of Environment and Climate Action, João Pedro Matos Fernandes, who assured that Portuguese consumers have “many mattresses” to face this situation of record wholesale prices.
Exists since 2014
The option of an annual fixed price, which must be supplied by the reference marketers (the same ones that are obliged to offer the PVPC, basically all large electricity companies), already exists in Spain for domestic consumers since 2014, through a Royal Decree March of that year. Then, the Minister of Industry, José Manuel Soria, launched the PVPC, after liquidating the previous regulated price setting system, which was based on a quarterly auction that favored speculation. The idea was to force these marketers to offer a more stable price for the consumer, at the cost of a risk premium at the expense of the user.
The successive reports of the National Commission of Markets and Competition (CNMC) confirm that this option of the fixed price, which gave the marketers freedom to determine it (it was enough for it to be fixed in advance and not change for a year), barely has used; which is much more expensive than PVPC (which, despite being more volatile, is the least expensive for the consumer in the long run) and still more expensive than fixed-price offers on the free market.
So much so that the CNMC has asked to delete it: “It is proposed to eliminate fixed-price offers from reference marketers, since these are among the most expensive of all the offers that small consumers can choose from in the market. free market, “indicated the CNMC in its latest report on the matter, published last January, on the eve of the arrival of the storm Filomena.
“This proposal is more relevant in 2019 given that the number of consumers benefiting from this option has multiplied by 2.5”, added the CNMC. As of that date (end of 2019, last year available) there were only 10,598 consumers supplied by reference marketers at a fixed price, compared to 4,223 a year earlier, of which almost 7,500 were in the Naturgy group. “A percentage of just 0.1%” of the 11 million customers covered by the PVPC, although “it is relevant that these consumers choose this option since there are other cheaper offers on the market,” said Competencia.
That report indicated that the price of the PVPC (which has been in decline for years in favor of free market offers) was reduced in 2019 by 7% compared to 2018, “resulting in around 17% lower than the average price billed by the set of trading companies to domestic consumers in the free market “. It was, together with the final price of industrial consumers (which fell 1%), the only one that fell. With this, the savings of the PVPC with respect to the offers of the free market for households was the highest in recent years: 17% in 2019, compared to 10% in 2018 and 15% in 2017, according to data from the CNMC .
As the CEO of Acciona Energía, Rafael Mateo, pointed out this Wednesday in the conference of El Economista, the PVPC, despite being volatile by nature, being indexed to the wholesale price, “has been proven year after year as the most cheap compared to the best offers on the liberalized market. ” Unlike Iberdrola or Endesa, Acciona does not have a regulated marketer that requires it to offer the PVPC rate.
In those same days, the president of Naturgy, Francisco Reynés, announced a campaign so that the eleven million customers in PVPC can contract with this company a rate in the free market from the 15th and “that during the next 24 months they pay within their bill the cost of energy at the same level of the price of the ‘pool’ that they had before the escalation, that is to say 60 euros per MWh “, compared to more than 141 euros this year. The offer seeks to ensure that customers “stop worrying about the evolution of the pool every day” and shows the “social commitment” of the company, which is “above the current situation,” according to Reynés. For the whole of 2023, two years from now, OMIP futures set pool prices of 62.75 euros this Wednesday, slightly above that offer that Naturgy has presented.
“You have to be cautious”
The reform of the PVPC is, together with the launch of auctions that force large electricity companies to give up part of their energy or tax cuts, among the measures that are being proposed in the package that the Government is going to approve in the next weeks.
In her last appearance in Congress, the third vice president and minister for the Ecological Transition, Teresa Ribera, indicated that in her department they are “sensitive” to a demand, she said, “raised by consumer associations, which is to regulate this again. PVPC rate, reducing its dependence on a volatile market, such as the wholesale market, and partially integrating a basket of more stable indicators that allow us to stay within much more stable, less volatile price ranges “.
“It will simply be important to remember, as is the case with the free rate, that this greater security means that part of the risk premium for reducing volatility is internalized and, therefore, that we must be cautious with regard to which are the indicators to be used. those that are indexed and when this modification occurs, “Ribera warned.
Is the design of the PVPC responsible for the high prices of light? A recent report by the Bank of Spain pointed out that the transfer of the increases in electricity in the European electricity markets due to the rise in emission rights and gas has been “particularly high” in Spain, due to the particularity of this rate.
But he also stressed that the systems that reference the domestic tariff directly to the energy price, such as the Spanish and others such as Estonia or Sweden, although they are more volatile, “allow consumers to internalize to a greater extent the signals provided by the prices, adapting their consumption pattern accordingly “, save users the risk premium implied by a fixed price and” tend to provide the market with greater transparency and allow more efficient demand management “.
The former socialist minister and former president of Red Eléctrica Luis Atienza explained in an interview in The mail Last weekend, “the so-called hourly rate has increased the cost of peak hours. And it seems a bad thing, but it is the formula for certain consumption habits to change or for the appliance industry to incorporate time programmers. Yes is removed, there will no longer be an incentive to move on that path. ”
The current system was put into operation in 2014, after another price spike that resulted in a fine from the CNMC to Iberdrola for manipulating the electricity market – the electricity system ended up being imputed in the National Court and the procedure is still open almost eight years later. . The PVPC thus replaced the so-called Cesur auctions. Electric companies, financial entities, brokers and traders participated in them, and they yielded a significant extra cost for the consumer that amounted to around 2,000 million euros between 2008 and 2013, due to the risk premium that involved paying a fixed price every three months for the energy to be supplied by the last resort traders (CUR).