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The Government launches a consultation for a possible reform of the electricity price system | Companies

After two large packages of shock measures to compensate for the rise in electricity prices, focused on a cut in taxes on the electricity bill and a reduction in the income of large electricity companies, the Ministry for Transition Ecológica has taken the first step to reform the so-called Voluntary Price for the Small Consumer (PVPC). A mechanism that consumers with a contracted power of less than 10 kW can take advantage of (10.7 million users are in it) whose modification seemed to be parked.

Almost by surprise, the department that heads Teresa Ribera, launched on Friday “a prior public consultation regarding the modification of the PVPC” whose deadline to respond ends October 22. After explaining a system that was approved on March 28, 2014 in a royal decree, the ministry asks citizens “if they consider it necessary to reformulate the structure and / or calculation methodology of the PVPC. A change that is proposed “in order to reduce the volatility of a price that plays a fundamental role in domestic economies, with special incidence in vulnerable groups.” In addition, it ultimately influences liberalized prices and volatility will increase as the weight of renewables increases.

If the respondent is in favor of reforming a price indexed directly to the wholesale electricity market, which on Friday reached 216 euros / MWh, compared to an average of 33 euros / MWh last year, the ministry asks respondents which structure it considers the most appropriate for the PVPC: one linked to forward markets, with higher prices but fixed during closed periods, or another similar to the current one subject to the fluctuations of the daily markets, that can benefit in times of low prices. It would be something like having a fixed interest mortgage (higher but closed) variable (riskier but cheaper in the long term) or a mix between the two.

In this sense, the ministry asks if the PVPC should take into account price signals from the forward markets, what type of contracts and terms would be more successful and if it would be convenient to maintain a certain exposure to the spot market and in what proportion. He also asks about the possibility of using a price basket of different forward energy products, what type of products and how often. Another option is to leave the current mechanism indexed to the spot market for consumers who so wish. Lastly, he asked how the transitional period between the current and the future PVPC should be articulated.

Industry sources point out that in a forward market “there is one who wins and one who loses” and that with a system of fixed prices in a given period (quarterly, semi-annually …) it makes it impossible to manage demand or the incentive to save energy in the current time slots. In fact, the EU Energy Directive recommends a volatile regulated price to incentivize such savings.

The PVPC, indexed to the pool negotiated by Omie, includes energy production costs, access tolls (the cost for the use of the networks, whose regulation depends on the CNM) and charges (other costs of the invoice unrelated to the electrical system, whose competence is the ministry) and the profit margin received by the eight regulated or reference marketers that supply by law to this market. These are, essentially, subsidiaries of the five large electricity companies, Endesa, Iberdrola, Naturgy, EDP and Viesgo.

The consultation is not binding on the Government, which could address the reform in a Royal Decree that would modify the 2014 one at the time it wishes, and which would submit to a new public hearing.

The text of the call, which you can consult here.

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