The Government launches the reform of the regulated electricity tariff for homes and SMEs

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The third vice president and minister for the Ecological Transition, Teresa Ribera, has already said on several occasions that it is necessary to stop the volatility to which the bill of the millions of homes and SMEs in Spain is subjected. Therefore, he has finally released a public consultation to modify the Voluntary Price for the Small Consumer (PVPC).

The regulated tariff is the electricity contracting modality chosen by 10.7 million consumers, around 40% of all domestic consumers.

They are consumers of electricity with a supply point with a voltage lower than 1 kV and a contracted power lower or equal to 10 kW. The consultation aims to gather proposals to reduce the volatility of the PVPC and optimize its design with a view to the energy transition process.

What is the PVPC

The PVPC, introduced by the 2013 Electricity Sector Law and regulated in the Royal Decree 216/2014, is a dynamic price fully indexed to the wholesale electricity market that includes, in an additive way, the cost of producing electricity, access tolls, and marketing charges and costs.

PVPC can only be offered by reference marketers (COR) designated by the Government. In addition, it allows vulnerable consumers to benefit from the social bonus, with discounts of 25% and 40%, and have access to other additional protections, such as the recent vital minimum supply.

Due to its configuration, the PVPC is one of the most competitive options for the supply of electricity, as revealed by the supervision reports of the retail market of the National Commission of Markets and Competition (CNMC), guaranteeing the profitability of the COR at all times.

High prices and volatility

However, the evolution of energy prices in recent months has led to a reflection on its configuration, since it fully and rapidly transfers the fluctuations of the wholesale market to households and SMEs. This has been publicly pointed out by various social actors, such as companies and consumer associations.

This greater volatility may be accentuated as the energy transition progresses and periods with low prices follow, due to a greater weight of renewable generation, with episodes of high prices, due to the presence of plants with higher variable costs, such as natural gas combined cycles.

The revision of the PVPC model was already included in the Royal Decree-Law 17/2021. The goal is to incorporate the price reference of the new auctions of long-term power purchase contracts, with a maximum weight of 10%.

But beyond this provision, it is appropriate to consider the possibility of modifying the structure and calculation methodology of the PVPC to reduce the volatility of such a basic commodity in households –especially the vulnerable ones– such as electricity.

The MITECO asks

Therefore, if it is considered necessary to reformulate the PVPC, MITECO invites you to answer questions related to its structure, the convenience of including price references for forward products, the most appropriate periodicity for updating it, the need to establish a transitional regime. for the new configuration or the opportunity to maintain a dynamic PVPC for those consumers who wish to do so.

Any other contributions deemed appropriate in relation to the matter consulted may be included in the responses. They will have to be submitted before October 22 to email [email protected], indicating in the reference subject “PVPC modification consultation”

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