The fine print of the Government decree to lower the price of electricity


Madrid

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The rise in the price of electricity, which today will rise to the all-time high of 172.78 euros per megawatt hour (MWh), has burst the hackneyed ‘social shield’ and has torn the seams of the coalition government. The Executive is aware of this, and to avoid the electrical drain yesterday, it approved an ambitious plan of shock in the Council of Ministers with which it intends to reduce the electricity bill by up to 30%.

What impact will the 2.6 billion hack of the electricity companies have on the bill?

The veto of the so-called ‘profits fallen from the sky’ will cause a great stir in the sector. But its impact on the bill will be limited, as explained by sources in the energy sector. «If natural gas prices continue to skyrocket as they have been up to now, the price

established in the wholesale market will remain high. It is a more cosmetic than effective measure ”, these sources explain. In other words, even if the remuneration that electricity companies obtain for selling ‘expensive’ energy that they have produced ‘cheaply’ is controlled, the market will continue to function as it has been up to now. The energy that enters the auction last, and therefore the most expensive, will continue to set the price in the wholesale market. And this will continue to be natural gas.

What will happen in the gas market next year?

The Government has assured that it will limit the rise in natural gas, whose regulated tariff (TUR) is reviewed quarterly, to 4.4%. A percentage significantly lower than the 28% rise that should be undertaken due to the rise in prices of this raw material. But this limit has a trick, because in reality the rise is deferred, it is not suppressed. That is to say, Consumers could pay that ‘forgotten’ percentage next year fractionally. For example, it could be the case that next year the price of gas falls and this is not transferred to the bill because the increase that the Government now differs is applied.

Will alternative auctions be effective?

Industry sources point out that there are many “doubts” that this new alternative auction system, to which the producers would have to allocate part of their production, works in practice. Given that the majority of marketers and producers are in the hands of a few companies, there are fears that these companies will agree on a series of prices also in this secondary market.

Will free market consumers escape the rise?

No. In this market, prices are agreed in advance, but they are also reviewed from time to time. Therefore, the increase in light will sooner or later have an impact on the pockets of these consumers. From the sector they warn that some companies are already “encouraging the consumer to switch to the free market at the highest peak of light. In practice, they offer you a price that, although it may seem cheap now, is actually inflated.

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