Millions of consumers attend anxious these days to brutal increase in the price of electricity. What most of them do not know is that this rise does not affect them directly. Because the evolution of the daily wholesale market -which is the one that is becoming more expensive at the beginning of the year- serves to configure the invoice of users of the regulated rate, called Voluntary Price to the Small Consumer (PVPC).
We speak of approximately 40% of the total number of users, more than 11 million households. The rest is in the free market. That is, it pays a price for contracted power and consumed kilowatt agreed with the marketing company. However, if the pool maintains an upward trend, in the end it will end up reverberating in revisions or new free market contracts.
But most consumers don’t know the difference between both rates. Specifically, one in four, according to the latest Household Panel on electricity and gas prepared by the National Commission of Markets and Competition (CNMC) with data from the first half of 2020. It is not surprising then that these users do not know in what type of market they have contracted the electricity supply.
Since April 1, 2014, supply points made at voltages not exceeding 1 kV and with a contracted power less than or equal to 10 kW -that is, the vast majority of households- can choose three contracting modalities.
One of them is the PVPC, which incorporates in the energy term – what is paid per kilowatt consumed – the prices of the daily wholesale market or ‘pool’. This rate is supplied by reference marketers, which are four large electricity companies, plus Repsol and three other companies that operate in very specific and small geographical areas.
In turn, the PVPC presents three types of access fees with different prices of the energy term depending on the time period in which the consumption is made: without time discrimination (2.0A), with hourly discrimination in two periods (2.0DHA, and means that a most expensive price in the daytime time slot than at night), and with supervalle time discrimination (2.0DHS, with three time bands).
The second, the one chosen by the largest number of consumers – is that of the free market: the supply is contracted with any marketer other than the reference one, and in accordance with the price and conditions that may be agreed upon.
There is a third modality, which consists of a fixed price for 12 months that is applied to the consumption of electricity. The reference marketers are obliged to offer it as an alternative to the PVPC. It is a fare that is not very popular, largely because prevents electricity companies from offering additional services such as those included in their free market modalities.
Whatever the chosen modality, the consumer pays the following concepts:
–Access tolls: It is the payment for the use of the distribution company’s networks. It’s called the access fee and consists of two terms, power and energy. The first one is fixed, and pays the contracted power. The kilowatts are multiplied by an amount established each year by the Government. In recent years it has not changed. The second term is variable, and serves to pay for the energy that has circulated through the distributor’s network for consumption.
-Energy: it is what is paid only for the energy consumed, measured by the meter. It is the result of multiplying the prices of the offer or contracted product by the kilowatt hours (kWh) that the meter measures. In the PVPC this price is determined by the ‘pool’.
But, How do I know if I am covered by the regulated tariff or the free market? The key is in the ‘name and surname’ of the company with which we have contracted the service. There are only eight companies authorized to supply electricity and gas in the regulated market. Almost all of them also offer rates in the free market, but they have to do so under a different company name. These are the reference marketers that offer the PVPC:
-Energía XXI Comercializadora de Reference, SL (Endesa)
-Curenergía Comercializador de Último Recurso, SAU (Iberdrola)
-Comercializadora Regulada, Gas & Power, SA (Naturgy, the former Fenosa Natural Gas)
-Baser Comercializadora de Reference, SA (EDP)
-Régsiti Comercializadora Regulada, SLU (Repsol)
-Comercializador de Reference Energético, SLU (CHC)
-Teramelcor, SL (operates in Melilla)
-Energía Ceuta XXI Comercializadora de Reference, SA
Supply through PVPC is automatically extended, and It is essential to qualify for the social bonus, which is a 25% discount on the bill for large families and vulnerable consumers, and 40% for the severely vulnerable.
The denominations with which the main trading companies operate in the free market son:
–Endesa Energy SA
–Iberdrola SAU Customers
–Naturgy Iberia S. A.
–EDP Energy SAU
–Repsol Comercializadora de Electricidad y Gas SLU
–CIDE HC Energía SA (CHC)
As in the PVPC, the free market contracts are also automatically lengthened after the expiration of the period, which is usually annual. Yes, you have to take a good look at the new conditions of the marketer at the time of renewing the contract, because they usually include higher prices than in the first year offer.
While in the PVPC the rate is the same for allRegardless of the company with which it is contracted, in the free market, companies can offer endless rates adapted to consumer habits.
Another difference between the regulated tariff and the free market is that in this second case the trading companies are allowed offer added services such as maintenance of electrical installations, insurance, joint offers of electricity and gas, etc.
Which modality is best?
What is the cheapest option? It is not a question that can be easily answered, because the prices of the PVPC are variable depending on the pool, while those of the free market are those agreed with the trading company for the entire contracted period. Despite the ups and downs, the regulated tariff is, in the long run, cheaper than the free market.
The CNMC Household Panel revealed that, in mid-2020, the monthly expenditure of a household benefiting from the PVPC was 37 euros (excluding those benefiting from the social bonus), with a average consumption of 188.1 kWh / month. Figures that show a average cost per kilowatt consumed at the time of 0,1967 euros. Keep in mind that 2020 was one of the cheapest years in the wholesale electricity market.
On the other hand, in the free market this average expenditure reached 56.3 euros per month (figure that does not include expenses for other billable services such as insurance or maintenance fees), with a higher consumption of 214.4 kWh / month. That is, these customers paid the kilowatt to 0,2625 euros.
Of course, in 2018, when the ‘pool’ recorded the highest prices in a decade, PVPC was slightly more expensive that the best of the offers that at the end of that year could be found in the free market. It should also be borne in mind that most of these offers are linked to a series of conditions that sometimes make the final price somewhat more expensive, or force you to register for other services of the company in question.
Tips for contracting supply
Before contracting an energy supply, the CNMC advises, first of all, compare prices and services that offer at least a couple of different companies. And it makes available to the public a comparator of offers. Also find out if you have the right to social bonus electric.
The superregulator warns that since October 2018 it is home sale prohibited of gas and electricity supply if the visit has not been previously arranged. Before deciding on an offer, you must carefully read the conditions of the contract. In particular, whether or not it includes the contracting and charging of other additional services.