Next Tuesday, after several postponements, the new electricity bill comes into force. The change, designed by the National Markets and Competition Commission (CNMC) and highly criticized by the consumer organization Facua, comes at a time of high prices in the wholesale market that determines the cost of the energy consumed.
The Government, which on Tuesday plans to send Congress the National Fund for the Sustainability of the Electricity System (FNSSE) that it presented in December to remove the cost of the oldest renewables from the bill and lower it by 13% in five years, prepares a preliminary project to act against the so-called “benefits fallen from the sky” of hydraulics and nuclear.
The Executive gave the green light to the new receipt that is now being launched with a ministerial order approved in April by the fourth vice president and minister for the Ecological Transition, Teresa Ribera. He justifies it as a measure to promote savings, efficiency, self-consumption and the deployment of the electric vehicle.
The new rate applies to all consumers price discrimination with three time bands (peak, flat and valley) for the regulated part of the bill for the energy consumed. In addition, two different powers may be contracted, with two different price ranges.
The part regulated from now on is divided into two concepts that account for 55% of the final bill: tolls (to pay for transmission and distribution networks, the cost of which is determined by the CNMC) and charges, which are set by the Government and which they repay the premiums to the oldest renewables, the extra-peninsular systems and the annuities to pay the tariff deficit (the accumulated stock of debt because in the past the income did not cover the costs).
The peak period, in which tolls and charges will be more expensive (95% more than the valley), will go from 10 am to 2 pm and from 6 pm to 10 pm; the flat, with an intermediate cost (25% cheaper than in punta), from 8 to 10 hours; from 14 to 18 hours, and from 22 to 24 hours; and the valley rate, the cheapest, will cover from midnight to 8 in the morning and all hours on weekends and holidays.
The peak period includes the 2,040 hours of highest electricity demand of the year; the plain, the 2,040 hours of intermediate demand, and the valley, the remaining 4,680 hours. In total there are 88 off-peak hours per week, which represent 52% of the total, so a large part of the consumption (refrigerators, stand-by, appliances connected 24 hours), will continue to be done at that time.
What about the contracted power?
With the new system, all consumers by default will maintain their current power. But the CNMC advises hiring two differentiated depending on the time slot, because now two periods are launched: peak and valley. The recommendation of the CNMC is to try to lower the peak power, more expensive, which will go from 8 in the morning to 24 at night, and go up the valley, much cheaper (1.42 euros per contracted kW), which will apply the rest of the hours on weekdays, and all hours on Saturdays, Sundays and national holidays.
How will the change be applied?
It will be automatic for the nearly 10.7 million homes covered by the semi-regulated rate of the voluntary price to small consumers (PVPC), which is the most recommended by the experts and to which all supplies with up to 10 kW of contracted power can be used. (the vast majority of households). In this case, the reference marketers will directly apply the new tolls and charges.
For consumers who are in the free market, who are the majority despite being more expensive (more than 16 million supplies), the impact will depend on how companies transfer the variation of the regulated component of the invoice. The marketer “must communicate the changes sufficiently in advance and in a clear and transparent manner,” recalls the CNMC. The OCU has expressed its concern on this aspect: remember that all of them must affect the changes (raise or lower the bill in the corresponding proportion), but they are free to apply the new time frames or maintain the previous situation.
Where can I check the prices?
The electrical system operator, (REE), will publish each day at 8.15 pm on the eSios website and in the redOS app the hourly prices of electricity for the next day adapted to the new structure of charges and tolls. “By consulting the price information offered by Red Eléctrica de España, the consumer covered by the PVPC can decide which is the period that interests them the most to consume electricity,” the company explained this Monday.
What is recommended to save?
To achieve savings compared to the previous system, it is very likely that some consumption habits will have to be modified. According to calculations by the CNMC, if an average domestic consumer (with a contracted power of 4 kW) cut their power to 3.5 kW in the peak period and the valley to 2.3 kW, they would obtain a reduction in the regulated component of the 6.8% and a final saving of around 3.4%, since this regulated part (made up of the so-called tolls and charges) accounts for around half of the bill.
If the consumer, in addition to adjusting his power, transfers a small part of the consumption from the peak period to the flat and valley, “the savings in the regulated component of the bill could exceed 15%”, which implies a final saving 7.5%. The CNMC recommends, for example, moving ironing (one of the activities that consume the most electricity) to off-peak periods: thus, ironing in the flat period instead of at the peak “would reduce the cost by 38 euros / year”.
Competition points out that avoiding simultaneous consumption of household appliances “could induce savings of between 200 euros and 300 euros per year, for a consumer with high electrical equipment”, if the contracted power at peak hours were adjusted to the new model.
How do I know how much power I need?
Consumers can consult their distributor’s website (and with the contract in hand) the data of their maximum power demanded and consumption. But perhaps the most practical thing is to wait for the first invoice to arrive with the new model. The one for users with PVPC, which will be shorter (two pages), will include information on the maximum powers that each consumer has demanded in each hourly period of the last year, to get an idea of the margin to adjust it. A QR code will also be included to access the CNMC’s energy offer comparator.
To facilitate adaptation, consumers will be able to change the wattage twice during the first 12 months, until May 31, 2022. Then only once a year.
From the Selectra rate comparator they recommend maintaining the usual power during off-peak hours, at least for the moment, and trying to shift consumption from peak (expensive) hours to those cheaper hours. “At the same time, you will not lose quality of life, being able to use different electrical appliances during the weekend without having to suffer in case the leads jump” by exceeding the contracted power.
What if I have the social bonus?
Discounts for consumers who have been granted the social bonus for being considered vulnerable (of a minimum of 25% on the bill) will continue to apply.
Is this going to lower the bill?
Ecological Transition relies on a “certain reduction” of the average bill after its launch. But he has warned that the system “does not seek to reduce the price of electricity immediately”, but to give “adequate signals” to consumers.
The impact will depend on each case. In general terms, according to the CNMC, for the majority of households the regulated component of the bill will be reduced by 6.7%. This would imply a final saving of approximately 3.3% for some 19 million consumers. It is a very small saving: the billing of tolls, charges and payments for capacity will be reduced for the average consumer with contracted power less than 10 kW (current 2.0 A toll), approximately 17 euros per year, before taxes.
However, the bill will increase “slightly”, about 2 euros per month (24 euros per year) for those who were already benefiting from the old tolls with hourly discrimination: about 10 million consumers.
Why is this change being made?
The objective is to encourage the transfer of electricity consumption from the hours of maximum electricity demand to others in which the transmission and distribution networks are less saturated, and facilitate the decarbonization of the economy with the electrification that comes. This will reduce the need for new investments. In the long run it will translate into lower costs for electricity consumers, who are the ones who pay for them.
Are there similar models in other countries?
The CNMC itself recognizes that this is a pioneering experience, although the trend in Europe is to favor efficiency in consumption. Spain already innovated at the time with the hourly prices of the energy consumed (linked to the wholesale market price) of the PVPC that the PP Government implemented in 2014.