The difference between the three time sections of the electricity bill remains without effect

After a year of design, the reform of the electricity bill created by National Market and Competition Commission (CNMC) and the government has lasted, in practical terms, only three months: from June to September. The Executive’s measures to reduce the price of the electricity bill have ‘stand by’ the valley, flat and peak hours system which came into force on June 1 with the objective promote energy efficiency of consumers.

The time slot system had a huge controversy after its start-up because the peak hours were the most expensive and those of lower consumption, the cheapest, despite the fact that that is precisely their objective: to promote change of habit of consumers for, thus, lighten the curve charge from the electrical network. The time slots continue to apply, but currently the differences between hours have disappeared practically.

For example, if the difference in the price per kilowatt-hour in June (25th) between the most expensive hour and the cheapest was 15 cents, it is currently 9 cents. But even more evident is the variation between putting an appliance at 10 at night or at 12 at night, in this case if now the price per kilowatt-hour is one cent, in June it was five cents.

The reason for this difference is due to the royal decree law that the Government launched in September to lower the electricity bill which included a 96% reduction in charges (one of the four parts of the bill, along with the price of energy, tolls and taxes) and caused the immediate disappearance of the mounds from the daily price curve.

The time slots are a artificial measure created by the CNMC (through the tolls that pay for the transport and distribution of electricity) and the government (through the charges that include a potpourri of expenses such as renewables premiums and electricity debt) to increase the price of electricity in the peak period, and a little on the plain. “By eliminating practically all the charges, the curve has flattened,” explains the energy expert and consultant at Menta Energía, Francisco Valverde.

Beyond the time slots promoted in the reform of the CNMC and the Government, in general the peak hours of the system occur between 11 a.m. and 12 a.m. and between 7 p.m. and 8 p.m. due to commercial activity and the occupation of homes, according to Red Eléctrica.

In addition, as in September the Government also reduced taxes, now the cost of energy has more weight in the bill, which previously represented around 30% -35% and currently represents more than 60% of the total, according to Diego Rodriguez, Professor at the Complutense University of Madrid and Fedea researcher.

Next year

All in all, this reduction in charges is temporal and, for the moment, its expiration date is the next December 31st. The same occurs with the reduction from 21% to 10% of VAT and the Special Tax on Electricity, from 5.11% to 0.5%, as well as the suspension of 7% of the Tax on electricity generation. The Government must decide whether to extend, at least during the first quarter to prevent the electricity bill from skyrocketing again. “Our calculation is that there may be high gas and electricity prices throughout 2022. And this is what will make us consider when the time comes to maintain some of these measures,” said the vice president and minister for the Ecological Transition , Teresa Ribera, a week ago, when asked about the extension of the measures after January 1, 2022.

Related news

In addition, to this practical freeze of the controversial time sections, we must add in the medium term a hypothetical reform of the regulated tariff or PVPC (Voluntary Price for the Small Consumer) that could also ruin the reform of tolls and charges of the Government and the CNMC. The Executive has not yet revealed its decision, but has made a public consultation to gather the opinion of the sector and consumers. However, the disappearance of the regulated rate would render this reform ineffective, since users with PVPC are the ones who perceive the difference in the time slots. In the case of free market rates, the marketers may or may not reflect these differences in the invoice, as many of them choose to offer a flat rate that maintains a stable price.