Gas Price Reforms and Regulated Tariffs: Industry Trends and CNMC Scrutiny

Large energy companies continue to see a high flow of customer transfers into regulated natural gas tariffs, driven by government-supported measures aimed at reducing bills amid the ongoing energy crisis. After the initial surge, transfers have not slowed; in fact, they have intensified through the year so far.

Leading gas providers are required to offer different regulated tariff options, known as tariffs of last resort, and they are facing a real surge in demand from customers wanting the protection of regulated prices. This marks a swing away from the trend of recent years, when regulated tariff customers shrank while free-market options expanded.

In the context of state aid, major energy groups added nearly 200,000 new customers to regulated tariff plans in January alone, according to internal company data obtained by EL PERIÓDICO DE ESPAÑA from the Prensa Ibérica group. This comes after roughly 550,000 registrations in regulated tariffs were recorded in the last months of the previous year, all under government-mixed pricing with substantial discounts.

Naturgy, the dominant operator in the Spanish gas market, added 83,000 customers to its regulated supplier portfolio in January. The company, led by Francisco Reynés, confirmed that it had enrolled 230,000 customers into its regulated gas tariff in 2022, of which 190,000 were concentrated in the final part of the year.

Iberdrola boosted its regulated-rate client base with 70,000 new contracts in January. The group reports that the volume of TUR contracts has more than tripled within four months, rising from 111,000 customers at the end of September to 370,000 at the end of January.

Endesa, which has not yet disclosed the January increase, anticipates unveiling its financial results at month-end. The Enel subsidiary notes that its growth rate is slightly below the levels seen in October and November, when it added more than 30,000 new users to its retailer as a last resort option.

Total Energies confirms a rapid expansion of its regulated-rate customer base. It tripled its contract portfolio in 2022, growing from 60,000 to 182,000 by December, and added another 33,000 new customers in January, bringing the total to 215,000 contracts.

Subsidized rates

Currently, about 2.2 million homes in the country enjoy regulated gas rates above 33%. This level is higher than when the administration activated its latest aid plan in October. Yet the number of customers in the free gas market, where prices are set by providers, remains far larger than those in the regulated sector, where prices are set quarterly by the government based on international energy prices. Market leaders like Mercado Libre still dominate, encompassing around 6 million customers.

The government rolled out a multi-million-euro package last October to lower regulated gas tariffs’ prices. In practical terms, this means direct subsidies reducing bills for customers served by large energy companies.

An anti-crisis shield worth 3,000 million euros is designed to continue legally limiting price increases for more than two million regulated-gas tariff customers through 2023, and to create new discounted rates for homes with central heating across neighborhoods, with roughly 2,000 communities already joining.

CNMC investigation

The National Markets and Competition Commission (CNMC) has opened an inquiry into major gas firms to determine whether they impeded large-scale transfers to regulated gas rates amid the surge in demand. The agency has initiated an information file and is collecting periodic and ongoing data from these providers. Naturgy, Endesa, Iberdrola and TotalEnergies are scrutinized for the resources they used to process rate-change requests, following complaints about delays, lack of information, and difficulties in contracting.

As the transfer surge continued, CNMC broadened the inquiry to detect potential fraudulent behavior related to customer transfers. The probe also includes oversight of whether energy companies violated new rules prohibiting them from selling additional services, such as maintenance or emergency measures, during rate changes. The focus is to ensure fair handling of customers moving between market segments.

Customer service channels have been strengthened in recent months to manage the increased demand from large energy providers and customers switching from the free market to regulation. The improvements have been acknowledged by the Ministry of Ecological Transition.

The industry wants reform

Industry players caution about the consequences of protecting one tariff class at the expense of others. The Ecological Transition Ministry’s aid plan, targeted at regulated rates, could distort the market and put pressure on price-stable providers in the free market. The industry advocates for measures that would lower bills for all customers, not just a subset, to preserve market balance and competition.

Representatives of Sedigas—bringing together marketers, transport and distribution networks, and suppliers—have urged the government to allow any marketer to offer regulated gas rates or apply subsidies to free-market prices. The government has indicated it is exploring options to accelerate customer switching but has yet to implement concrete actions, and industry stakeholders deny imminent reforms in that area.