The regulated electricity tariff, known as the voluntary price for small consumers (PVPC), underwent a significant exodus of customers during the energy crisis. Over the past two years, nearly two million users have left the regulated tariff offered by major electricity companies through designated marketers, including Iberdrola, Endesa, Naturgy, Repsol, and TotalEnergies.
Large electrical groups are now observing a slowdown in this customer outflow. Based on the price comparator from the National Markets and Competition Commission, the market has stabilized so far this year. This stabilization occurred at a moment when the regulated tariff remained cheaper than those in the free market, prior to the reforms aimed at reducing volatility in PVPC. The government’s reform seeks to temper fluctuations by anchoring price formation to longer-term market dynamics rather than solely to daily wholesale movements.
During the worst phase of the energy crisis, households experienced the greatest volatility in the regulated electricity tariff, directly reflecting the historic surge in prices. Historically, the price of electricity within the regulated market has been connected to wholesale dynamics, where electricity and merchants transact energy for consumption the following day, often setting monthly maximums.
Almost 2 million fewer customers
Record-high wholesale prices were the primary driver of this exodus. Since the onset of the energy crisis, a large number of customers have shifted away from the PVPC. In May 2021, just before the record price increases and government measures such as the first VAT reduction on electricity receipts, the customer portfolio under regulated tariff contracts stood at 10.52 million users, according to CNMC records.
Ending last year, the number of households with electricity tariffs under regulation decreased by 8.67 million, according to the latest official CNMC data. In the current year, the big electricity companies have maintained a relatively stable number of regulated tariff customers, with only a minor decline in the first half of the year, as various industry sources noted while awaiting CNMC’s total figures. Free-market rates reached about 21.4 million customers by year-end, representing roughly 70% of all users.
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The government recently approved a tariff reform designed to curb volatility by linking price formation not only to the daily electricity market but also to other relatively stable long-term market indicators. This reform, scheduled to take effect in 2024, increases the influence of long-term market developments on the final price each year.
Households and small businesses with contracted power under 10 kilowatts can choose between contractually regulated electricity tariffs—whose value depends on wholesale price movements—and free-market offers, which are typically set by providers and often feature fixed prices.
Historically, PVPC has tended to be the cheaper option, even as the crisis sent price records soaring across the market. Currently, following the initial Iberian market exclusions and a decline in gas prices, PVPC has become more affordable again than most free-market offers, according to CNMC’s price comparator. Still, marketers have narrowed the gap, and some free-market plans now exist with prices closely tracking PVPC levels. (CNMC, 2023; energy market data cited by CNMC price comparator)”