Reforms to Electricity Bills and Iberian Mechanism Explained

No time to read?
Get a summary

The government is outlining important changes to electricity bills and how customers experience them. All invoices from small customers include receipts from large companies offering the regulated rate, known as the PVPC, as well as receipts from suppliers on the free market.

New steps are part of broader security measures. A national energy security plan was approved this week, including provisions to shield the system from external pressures and to ensure the plan is shared with Brussels. Consumers will also see guidance aimed at minimizing confusion caused by marketing claims and at reducing overall energy use. The plan incorporates data on local consumption patterns and the average activity in each neighborhood to inform better decisions about usage.

The Ministry of Ecological Transition oversees these measures, with the goal of ensuring that power companies provide clearer information about how changes affect customers. The Iberian mechanism, which has capped the gas used for electricity generation since last June to limit price spikes, remains a central element.

In the free market, electricity providers include in invoices both the cost of typical consumption and any additional charges, some of which fund compensation to gas-fired plants. The Iberian exception aims to prevent producers from taking losses, although the terminology used has varied, sometimes described as a tax in certain communications.

The government collects data from suppliers to standardize terminology and to show what prices would have looked like without the Iberian mechanism. This allows for a calculation of the savings attributed to the policy, and it highlights the effect of the gas price cap on the overall electricity market. From mid-June onward, the gas cap has helped restrain costs for all customers, according to official estimates.

During the cabinet discussion, it was emphasized that the measures introduced last year directly affected the prices paid by households and businesses for electricity and gas. Official analysis estimates that tax reductions and regulated cost cuts, along with the gas ceiling, helped around 10 million customers pay for electricity at the regulated rate and avoided a substantial increase in potential costs. Without the VAT reductions on gas and without the quarterly limit on increases in the regulated gas rate, households assigned TUR1 would face significantly higher bills, and TUR2 customers would see even larger differences.

Know the consumption of the neighborhood

Future bills will include practical tips for consumers to reduce usage, save money, and boost energy efficiency. A new comparator will show the average electricity use of residents in the customer’s neighborhood, along with demand trends by postal code, to help households use electricity more efficiently.

Changes to the bills will not take effect immediately after the contingency plan is approved. Regulatory development will require agreement with the National Markets and Competition Commission and an adaptation period for electricity distributors and marketers to update their systems and the billing process.

These updates are intended to provide clearer explanations for customers, standardize terminology across providers, and ensure that changes are implemented smoothly and transparently. Citations: Ministry of Ecological Transition, official plan documents, and regulatory assessments [Source: Ministry of Ecological Transition].

No time to read?
Get a summary
Previous Article

Elche CF Faces Off-field Hurdles and On-field Struggles in a Tough Season

Next Article

Elche PP Unites Fifty Groups for Investment Demands