Public attention continues as authorities seek approval for a new electricity tariff aimed at softening bill fluctuations. The minister of energy, speaking at a breakfast organized by the New Economic Forum, outlined the plan alongside the energy director of the European Commission, Ditte Juul-Joergensen. The new Voluntary Price for Small Consumers, technically known as PVPC, was slated for approval earlier and a swift rollout, reflecting plans that existed a year ago.
The tariff design directly ties to the wholesale market. Discourse at the onset of the energy crisis intensified after the war in Ukraine, when gas prices pushed electricity costs to record highs. Households under a regulated tariff in Spain have faced price hikes, a pattern not uniformly seen elsewhere, where increases have occurred but more gradually. The new scheme seeks to address this volatility in a measured way rather than to deliver immediate, sharp declines.
The chosen mechanism by the manager to stabilize the tariff links the energy price, one element of the invoice alongside contracted electricity, taxes, and regulated items, not only to the daily market but also to the futures market, which tends to be steadier. Specifically, the futures portion is allocated as follows: 10% tied to a monthly product, 36% to a quarterly product, and 54% to an annual product. The transition will be gradual, with a reference to the forward market set at 25% of the price in 2023, 40% in 2024, and 55% in 2025.
This approach aims to dampen price swings, though it does not guarantee lower overall costs. In both the CNMC report and the government’s economic memorandum accompanying the previous royal decree, scenarios that saw price increases similar to last year would be softened by this mechanism, while a stable, prewar pattern could still imply higher bills under certain conditions.
European Commission
Within the ongoing dialogue between the European Commission and the governments of Spain and Portugal regarding a potential gas price cap, Spain informed Brussels of its intent to reform the regulated electricity tariff to curb excessive dependence on the daily market. This is in line with the EC’s expectations that national reforms should accompany the extension of the daily market, a stance initially anticipated by European authorities.
If plans remain unchanged and Spain approves the new rate before the end of June with a January 1, 2024, effective date, the revised tariff will take effect once the gas price cap extension concludes on December 31 of that year. These steps reflect coordinated efforts to align national and European energy policies while maintaining stability in consumer bills amid market volatility.