It won’t be “fully effective” until early 2024
MADRID, 13 Jun. (EUROPA PRESS) –
The Council of Ministers will approve this Tuesday the reform of the regulated electricity tariff, the so-called Voluntary Price for Small Consumers (PVPC), which “will reflect” the proposal that was sent to the State Council for approval and that “will not be fully effective until the beginning of 2024”.
This was stated yesterday by the Third Vice President of the Government and Minister for the Ecological Transition and the Demographic Challenge, Teresa Ribera, in statements to the press upon her arrival at the conference ‘Spain in the Europe of the 21st century’ organized by the consulting firm Hill Knowlton.
Ribera pointed out that the objective of this reform of the regulated tariff is to “reduce the volatility” that has been registered in episodes such as those experienced last year with the energy crisis due to the invasion of Ukraine by Russia and that the document that will receive light Green will only introduce the recommendations made by the National Commission for Markets and Competition (CNMC) and “will reflect promptly” what was sent to the Council of State.
“This rate directly linked to the wholesale market price has been the most convenient rate since it was introduced, but with the turbulence of last year, we realized that it was also enormously insecure if you could live again, hopefully not, an episode like that of 2022,” he said.
In this way, the new PVPC will introduce correction factors, “making this rate reflect a very good part of the daily market price, but also the prices that reflect the markets in the future, three months, one year, and with this reduces volatility,” he added.
However, Ribera acknowledged that a transition period will be given to the operators so that they can purchase their energy in the market and, therefore, the new regulated tariff “will not be fully effective until the beginning of 2024.”
In October of last year, the Government already presented its proposal for a Royal Decree to reduce this volatility of the regulated tariff, giving greater weight to references to futures markets, which will grow progressively to represent 55% in 2025.
Thus, it is planned to incorporate into the PVPC calculation formula -contracted by the owners of some nine million supply points, 35% of the country- a basket of medium and long-term prices to avoid strong fluctuations, without losing the short-term price references that encourage savings and efficient consumption.
Indexed to the daily prices of the Iberian Electricity Market (Mibel), the PVPC was the cheapest option for small consumers since its creation in 2014. However, this direct relationship with short-term wholesale prices has meant that its variations, with sharp peaks and rises due to the war in Ukraine in recent times, are automatically reflected in the final invoices.
In this way, it is intended to progressively reduce the link of the PVPC to the daily market and the more stable prices offered by the Mibel forward markets will be taken into account, where energy is purchased in advance in different future time horizons.
To do this, the price oscillation -the variation between the maximum and the minimum register- is reduced by a third, going from 27% to 17% during the day, and from 23% to 16% in the monthly average during the entire year. .
In addition, the daily prices of the Mibel represent 100% of the PVPC reference and now that proportion will be progressively reduced, to incorporate the references of the futures markets, so that they represent 25% in 2023, 40% in 2024 and 55% in 2025.
The approval of this new PVPC is one of the commitments of the Government with the European Commission when the approval was received for the application of the so-called ‘Iberian exception’ for Spain and Portugal.
