The regulated price of electricity (PVPC) to which domestic consumers with a contracted power of less than 10 kW are entitled and to which the vulnerable group covered by the discounts of the social bond (1.2 million users) has become the greatest hell within the infernal drift that wholesale market prices have taken (pool) after russian invasion of ukraine.
In a package of urgent measures to mitigate the exorbitant rise in this market, which yesterday climbed to €544.98/MWhcompared to the 50 euros/MWh that the electricity had been trading on average in the years prior to the pandemic, the Government wants, among other measures, to decouple the social bond from pool prices, which they have swallowed the benefit of some discounts that are serving little.
And it is that the aforementioned PVPC (Voluntary Price of the Small Consumer) has as a direct reference the daily price of the pool. This regulated tariff (paradoxically, the most expensive on the marketwhen the initial objective was to offer a refuge to small consumers) is still maintained by some 10 million homes. And, although almost half a million have abandoned it in the last semester, to switch to the free market (in this segment there are currently some 16.2 million domestics entitled to PVPC) is a relatively low volume considering the harsh price crisis, which began last summer.
At the moment, according to political sources, the Executive wants the price of electricity to be reduced for those who have a social bonus, without the option of a rate other than the PVPC, be effective. To do this, it is studying different options, such as creating a social tariff at a much lower price than the market price (perhaps about 50 euros/MWh), setting, as until now, consumption limits. This could lead to an important legal change of the bond.
At the moment, there are three types of consumers entitled to it: the vulnerable, the severely vulnerable and those at risk of social exclusion, based on income and certain requirements (large families, the disabled, retirees and victims of terrorism or gender). As a result of the energy crisis, the Ministry for Energy Transition last November increased the discounts (until March 31), which until then were between 25% and 60% to a band of 40% to 70%, depending on the cases. For households in a very precarious situation, in which social services intervene, electricity is free.
Until now, the social bond was financed, as a public service, by the electricity marketers, both free and regulated, or COR, which supply the PVPC and its annual cost around 200 million of euros. However, a ruling by the Supreme Court on January 31 annulled this obligation as it was considered discriminatory, and imposed that those affected be compensated with the contributions they have made since 2018, when the model came into force, except for those that do so. have passed on to end customers. Therefore, the government must approve a new financing mechanismin compliance with the Supreme Court ruling.
Other measures
The package of measures, included in a royal decree that will be approved shortly by the Council of Ministers, also includes, tax cut extension to the electricity bill approved since June of last year and that it would already go for the second extension. It is about the suspension of the 7% tax on all types of generation, which expires on the last day of this month; the drop in VAT from 21% to 10% and the electricity tax, from 5.4% to 0.5%, which ends on April 30. On the other hand, as announced last week by the Prime Minister, Pedro Sanchezthe tolls of large industry will be compensated by 80% via Budgets, as Germany and France do without opposition from Brussels.
The Government, in addition, will introduce in the RDL the anticipated extraordinary review of the remuneration of the renewables of the so-called remember, which will allow a reduction of the so-called bill charges (the fixed part that is the responsibility of the Government) this year of between 2,000 and 3,000 million euros, according to different calculations.
This has been possible thanks to the minimum agreement reached, after many weeks of negotiations with the ministry, between the main associations of the sector: the Wind Business Association (ESA), the Spanish Photovoltaic Union (UNEF), the Association of Renewable Energy Companies (APPA), Anpier and Protermosolar. These have agreed to advance the adjustment of their remuneration parameters by one year (to January 1 of this year) and to stop charging deviations from high electricity prices, which should have been settled on January 1 of next year. In the triennium 2020-2022, companies were entitled to receive, per year, 54.42, 52.12 and 48.82 euros MWh (to be compensated if they did not receive it in the market or to be returned, if they exceeded it, as it has been), a price that in the first year of the pandemic was lower, 33.96 euros, and therefore must be adjusted upwards, and in 2021, downwards.
One of the most anticipated measures, which Brussels could include in the Communication (tool box) that will approve this week, on which the content of the RDL that the Government is preparing depends, is the possibility of decouple the price of generation with natural gas from the electricity market, to prevent the rest of the energies (nuclear and hydraulic) from receiving the extra benefits when gas marks the marginal price.
For now, the draft tool box, includes the reduction, via rate, of the extra income received by inframarginal technologies from combined cycle plants. A reduction that the Spanish Government already approved last September and that it later corrected to exclude bilateral contracts and that it has not meant hardly any collection.
Germany, against excluding gas from the market
There are those who consider that the electricity market is broken, so more than exceptional measures are necessary to curb prices. Spain has proposed removing gas generation from it to prevent it from contaminating price formation. But Germany and the Nordic countries resist.
The Executive, which has prepared a battery of measures against escalation, is waiting for Brussels to approve, perhaps today, the Communication that surely includes a rate on the so-called windfall gas, which receives nuclear and hydro, to approve them through of an RDL. The Government could go beyond the recommendations, but the change in market rules requires the coverage of the EU.
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