Domestic electricity reform discussions today

The reform of the Voluntary Price for Small Consumers, Precio Voluntario al Pequeño Consumidor (PVPC), also known as the regulated electricity tariff, will reach the Council of Ministers for its approval today, Tuesday, and that it can be applied as of 2024, as indicated by the Minister for Ecological Transition, Teresa Ribera.

Ribera, in statements to the media before inaugurating the III Summit of Self-Consumption and Energy Communities of the Spanish Photovoltaic Union (UNEF), has indicated that the new PVPC will reduce the high exposure of consumers benefiting from this rate to the volatility of the daily market.

She explained that the reform, which partially indexes the PVPC to a basket of forward market prices, is in line with the work that has been done in the last year with the document that was published for public information and the recommendations for improvement that received from the National Commission for Markets and Competition (CNMC).

Ribera has indicated that there will be a period for all the actors in the electrical system to be able to incorporate the novelties that the new PVPC will entail.

In this sense, she has said that the Ministry wants to give “until the beginning of 2024 so that everyone can carry out the corresponding operations” and that this rate can be offered without problems, so that consumers and marketers can adjust to “this new reality, much safer and much less volatile”.

She has insisted that the reform of the PVPC will reduce the volatility that has been experienced in the price of electricity and that was reflected in the daily wholesale market, to whose price the regulated tariff is currently directly indexed.

Ribera has said that although the Ministry hopes that the turbulence that hit the electricity markets in 2022 with the outbreak of the war in Ukraine, which harmed small consumers and families “enormously”, will not repeat itself, the new PVPC will generate more stability.

Teresa Ribera added that they thought it appropriate that in a country like Spain, with little interconnection with the rest of the European continent, the regulated tariff should have “some modulating factors linked to the price of electricity in the medium and long term”.

The reform of the PVPC to reduce its volatility was one of the commitments that Spain acquired when last year it was approved, along with Portugal, the “Iberian exception”, which caps the price of gas for electricity generation in the market electricity wholesaler, so that prices would not skyrocket so much at a time when the price of gas was hitting maximums.

The regulated tariff or PVPC is necessary to be able to have the electric social bonus, a discount on the electricity bill for consumers classified as vulnerable.

With the high prices that were reached in the wholesale market, the Government extended these discounts to alleviate the sharp increase in bills suffered due to the extremely high prices that were already reached in the summer of 2021 and that were later increased in 2022 with the outbreak of war in Ukraine.

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