Spain’s government regulated electricity tariff reform has put the focus on the National Markets and Competition Commission (CNMC) as the regulator. A senior official, Fernandez, suggested postponing the implementation of the new mechanism to assess its necessity and proportionality, with a decision anticipated on 31 May 2023. The aim was to protect consumers with stability and affordability in their electricity bills.
The PVPC reform is part of an agreement between Spain and the European Commission to introduce what is described as a cap on gas prices within the electricity market. For the reform to start on January 1, 2023, approvals were expected in early October 2022, but the government had not yet completed its assessment. The State Council reported, according to government sources, that the Ministry of Ecological Transition had proposed changes that were under consideration.
In a report approved by the CNMC general assembly on December 16, 2022, critics of the government’s proposals were voiced. The ministry’s ecological transition position supported adjustments intended to reduce volatility “slightly,” while noting that consumer bills would rise by about 1.7 euros per month for the average consumer under the new method, which was described as not delivering a meaningful gain in price stability.
Critics argued that the proposed formula could mislead consumers because the daily market does not track hourly price profiles. There would be hours when users do not perceive signals even when production is cheap, and, conversely, hours with zero or negative energy costs would not be clearly reflected in the real spot market prices. The concern was that the new formula might obscure true price signals and hamper consumer decision making.
The new method is presented as capable of lowering bills by incorporating a broader set of costs that could increase prices relative to the current approach. Proponents say the reform softens increases during price spikes and, in price declines, reduces the downside of discounts. Calculations from proponents suggested that, in 2021, the new method would yield savings for consumers, while 2022 might see higher costs.
As a result, a fresh analysis was requested to evaluate the mechanism’s effectiveness, with the aim of completing the assessment of necessity and proportionality by 31 May 2023. In an interview on Espejo Público, Ecological Transition Minister Teresa Ribera indicated she would urge Europe to maintain the price cap at least through the end of 2024, citing ongoing energy market volatility and the absence of a European reform in electricity markets.
Vulnerable consumers
CNMC has voiced concerns about protecting vulnerable consumers under the new framework. The commission believes the social bond discount should reflect broader support beyond the current PVPC pricing and is exploring alternatives that would offer more stable price conditions for those at risk. CNMC has suggested supplying vulnerable consumers through energy allocated via renewable tenders to ensure more predictable costs.
According to CNMC, the way the regulated price paid by vulnerable households is calculated should be simplified and better aligned with the overall financing of the social bonus. The current design, CNMC argues, increases the risk of instability for electricity consumers and would benefit from a redesigned approach that keeps social support reliable and straightforward.
Micro and small businesses
The reform proposal also affects small businesses and individual consumers who rely on the regulated tariff. Officials must demonstrate that these groups meet eligibility criteria, with verification overseen by CNMC. Given the large number of micro enterprises—estimated at around 881,360—the authority cautions that a comprehensive verification by CNMC alone would be impractical. The recommendation is to implement a government-led verification process to determine eligibility, rather than leaving this task solely to the regulator. A related assessment document emphasizes the administrative feasibility of validating who qualifies for support while ensuring accuracy and speed in delivery.