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What to do with the electricity bill in these troubled times? | Companies

Electricity prices have skyrocketed due to the effect of the rise in international natural gas prices, with which part of the electricity is generated (in Spain, around 20%), due to the conflict hatched by Russia since last year, which has ended in the bloody invasion of Ukraine. Consumers suffer their pockets and most of them get lost in the labyrinth of the invoice. Here are some tips, not so much to save compared to what you paid before the climb, but to avoid uncontrolled climbs.

How much do I consume?

The first thing to check is how much you are overpaying. The comparison is only correct if the consumption made is taken into account. It is not worth saying “this month I have paid 20 or 30 euros more than the previous one”, without comparing the kWh consumed in the compared months. This is important because prices in the wholesale electricity market (pool) began to skyrocket in mid-2021 and in June the Government temporarily lowered VAT on electricity from 21% to 10% and the electricity tax from 5, 1% to 0.5%. These tax cuts, which will continue this year, and the high energy prices mean that consuming a lot now means paying a lot, when, until now, what is known as the fixed part of the bill weighed more than or equal to.

What contract do I have?

To make a decision about what to do with your bill, it is essential to know what type of contract you have: the regulated rate, known as the voluntary price for small consumers (PVPC), to which households with a contracted capacity of less than 10 kW, or any other that has been subscribed with a free market marketer at the price that the client accepted but is usually unaware of. Of the slightly more than 19 million users with less than 10 kW of power (domestic), about 10 million are in the PVPC and the rest, although they are entitled to it, have opted for the free market. What group do you belong to?

What company supplies the light?

It is easy to check the type of contract you have signed: if it is not the PVPC, which appears clearly on the receipt, it is another from the free market. The PVPC is supplied only by the reference marketers (COR) authorized to do so and which are subsidiaries of the large companies in the sector: Endesa (through its subsidiary Energía XXI); Iberdrola (through Curenergía); Naturgy (Gas and Power), Repsol (Régsiti), and two or three testimonials. If none of these is your company, it will be any of the dozens that operate in the free market (both large and small). At this point, it is essential to bear in mind that the aforementioned electricity companies also have subsidiaries that sell on the free market under another name or one similar to that of their parent company. Therefore, a consumer who, for example, is with Iberdrola’s COR in the PVPC, can contract with Iberdrola’s marketer in the liberalized market (which is a different company but from the same business group). Or vice versa.

What are the PVPC and the free price?

The PVPC is a price that, by law (and, therefore, regulated), is the one recorded every day (and for hours) by the electricity pool, in which, to explain it briefly, the producers sell their energy through auctions to the trading companies that then supply their customers. These also pay a toll to the distributors (another type of subsidiary of the large electricity companies) for using the network that brings electricity to your home. Being a wholesale market, or wholesale, the PVPC was linked to it to guarantee the best prices to domestics, since it was a refuge rate for households. But the highly volatile model has been disastrous. With the current crisis, pool prices have paradoxically become the most expensive. In fact, when the media reports the daily electricity increases, you should know that they refer only to those of the PVPC, which includes the 10 million users mentioned above, but not the nine million of the free market. The confusion means that the latter have suffered from prices that are not theirs, since the free contracts are at a fixed price and for a fixed term, usually for one year.

All prices have been tainted

Until the end of last year, those who most noticed the increases were mainly those of the PVPC, for being subject to the high fluctuations of the daily market, while the rest, with annual contracts at a fixed price per kWh, had been freeing themselves until they The time for renewal has come. This is activated automatically, if the client does not say otherwise, and does not usually say so. In this case, the marketer decides the new price unilaterally, as established in the fine print. That the contract is renewed without prior notice entails a problem: that it includes a permanence commitment with a penalty to which it is tied for another year or more. In summary, the prices are already, in general, high for everyone: those of the PVPC because it is linked to the pool and those of the free market because the marketers now have to buy more expensively the energy they supply or cover the risk for the time of Contract period. But in this troubled river you have to be vigilant against the abuses of the companies and not confuse a rate with an offer.

How to act if you are in the free market

If this is your case and you want to change supplier, you can look for a rate (with suggestive names) on the companies’ websites (telephone service leaves much to be desired) and compare the price per kWh you pay now with the one offered. Also, keep in mind that the power term has a variable part (divided into two periods) that is paid based on consumption. Therefore, there is a rate per kWh for energy and another two for the contracted power that is also paid according to consumption (in this case, the lower the power, the less is paid). There are currently enormously different rates for energy: from 0.17 to 0.24, 0.28 and up to 0.36 euros/kWh. In any case, it is also necessary to see the kWh of power, although its weight in the receipt is less, and that the free rates can freely break them down.

What to do in the case of being a client with PVPC

As the PVPC does not consist of a fixed rate, with a price per kWh, but rather the hourly price of the pool, which has undergone strong fluctuations, comparing the average kWh you have paid with fixed offers on the free market is of little use. In such a case, you can use the user-friendly rate comparator of the regulatory body, the CNMC, or to others that are offered on the company website (also useful for liberalized customers). In it, the consumption and the invoice paid in a certain period (annual, monthly, quarterly) are entered and compared with the prices of the marketers that appear in the comparator. With this system you can verify how much you will pay in total for the same term and consumption. And if you wish to continue with the PVPC, the hourly price for the following day appears on the REE website.

No to maintenance services

Added services (for maintenance, non-payment insurance, etc.) that make the receipt more expensive must be rejected. And be very careful with the so-called flat rates, which will be, in the long run, high. Unlike the telephone, there are no flat rates for electricity, that is, a fixed price with no consumption limit. What the electricity marketers offer is a fixed fee per month, which is settled at the end of the year with the client, who is charged or refunded the difference between the contracted kWh and the actual consumption of the year. If you have to pay, the company offers to defer the payment of this difference in the following year’s installments (with interest, of course), so a mortgage is generated. These types of offers should not be accepted, unless they make the price of the kWh consumed clear and it is reasonable.

Turn down the power

An important measure to alleviate your bill (it is no longer about saving so much as preventing the bill from skyrocketing) is to lower the contracted power. The usual in an average home is 3.5 kW. The rule is as follows: if the automatic has never jumped, you have contracted more than necessary. And it will always be better to lower it and manage the use of electrical appliances, avoiding using them simultaneously, and check the result: if it is insufficient, you can raise it again (some electric companies charge a small amount). In the process of signing a new contract online (an option instead of waiting on the phone, common in recent times), the contracted power can be modified.

Power for electric cars

Owners of an electric car who recharge it at home at night should know that there is the possibility of contracting a second reduced power (1 or 2 kW) for night hours. Although it is a right for everyone, whoever does not have this type of vehicle is not worth the process. And always remember that what consumes the most is the refrigerator and, as a general rule, the devices that cool or heat. The lighting, and more if it is led, consumes less.

Respect the time slots

Users will remember that last June a new hourly price system came into force (not to be confused with the hourly prices of the PVPC for electricity consumption), according to which, payment was made based on three time slots: valley, flat and tip. The mechanism, which created a stir and lent itself to not a few scoffs, did not affect the price of energy, but rather meant savings in one of the fixed parts of the bill: the so-called charges or costs that are endorsed on it ( incentives to renewables or subsidies to the archipelagos) that are the responsibility of the Ministry for the Ecological Transition. As a result of the current price crisis, in September, the Government eliminated them, along with the tax cut, temporarily to lower the bill, so respecting these sections lost sense. However, in January, the Government recovered them by 30%, so adapting to them allows you to save something. And even if they are cut back (something that is not ruled out), it will always be circumstantial, so it is convenient for the user to adapt their habits to these sections. These are the following: off-peak hours, the cheapest: from 00 to 8 hours; the flat ones, with an intermediate price: from 8 to 10, from 14 to 18 and from 22 to 00 hours, and the peaks, the most expensive, from 10 to 14 and from 18 to 22 hours. On Saturdays and holidays, all hours are off-peak.

Vulnerable consumers with social bonus

This type of consumer must be very attentive, because in the package of urgent measures that the Government will approve on Tuesday, 29, a regulatory change will be included that will improve the benefits of your bill. These users are groups that meet a series of income requirements and are in certain circumstances (victims of gender violence or terrorism, large families and the disabled). There are three degrees (vulnerable, severely vulnerable and those at risk of social exclusion), which determine the discounts that are applied now, up to 70%. Being forced to be in the PVPC to benefit from the bonus, and given the sharp increases in that rate, the vulnerable (except for the last type, who pays nothing) have seen their discounts diluted to the point of not compensating them with respect to certain contracts of the free market. The new regulation will mean a social rate detached from the PVPC or a bonus, with a price based on consumption. The Government also plans to expand the number of beneficiaries, given the crisis situation.

Changes in sight

In addition to the changes in the social bonus, a rate that is proving unsocial, the Council of Ministers will approve other measures on electricity: the extension of the tax cut, an 80% cut in electricity tolls for industry, and, even some change in the PVPC mechanism, to avoid the upward fluctuations that this price has experienced as it is linked to the wholesale market. And the measure that will have the most effects for everyone, albeit indirectly, will be to separate the price of natural gas from the price of the electricity market, where cheaper energies (nuclear, hydraulic or renewable) participate, which are contaminated by it. In the latter case, there are several options on the table that the Government wants to agree with the European Commission.

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