The government is delivering another wave of adjustments to the gas sector, aiming to ease pressure on households. Aimed at lowering the regulated gas ratio, these changes come after a period that already saw about a million customers switch to subsidized rates within six months. With a quarterly review of TUR prices on April 1 and for the following quarter, the Manager reported an average discount of 29.9%.
The Official State Gazette (BOE) records the Ministry of Ecological Transition’s decision and the related State General Budget (PGE), reflecting new values in the TUR calculation that incorporate recent declines in gas prices. These moves follow extraordinary measures taken to mitigate Ukraine-related economic strain since October 2021, including accumulated industry debt offsets.
Government figures show households benefiting from TUR have saved between 100 and 300 euros annually, while small and medium enterprises have saved more than 700 euros, depending on annual consumption. TUR is a regulated rate reviewed quarterly by the Government, applying to any consumer connected to natural gas networks with annual consumption under 50,000 kWh. It now includes a 40% discount thanks to caps on price increases and currently covers roughly 2.5 million households and SMEs.
Subtitle: Subsidized gas rates
This TUR is reviewed quarterly and updates occur on January 1, April 1, July 1 and October 1 whenever there is a movement of more than 2% in the raw materials cost used in the calculation formula versus the previous quarter. Since the energy crisis began, the government has limited increases to a maximum of 15% of raw material costs, a measure that remains in place at least through the current year.
Parallel to this, the government has arranged a 3 billion euro loan to bridge the gas system with public funds, enabling a higher cap for TUR customers (TUR 1 and TUR 2 based on annual consumption) and for centralized neighborhood heating rates (TUR 3 or nearby TUR).
In this April 1 regulated tariff revision, two elements work together to deliver a robust consumer discount. First, the raw material price for natural gas fell 48.8% from 5.23 euros per kilowatt hour in January to 2.68 euros per kWh today. Second, the State Budget assumed the debt incurred since the extraordinary measures began. From October through March, the Government has allocated slightly more than 500 million euros to cover the deficit of major gas companies that must supply TUR. By January alone, about 354 million euros had been paid.
Aid reshapes the market
State aid to reduce natural gas bills has shaken the market and altered consumer behavior. Subsidies aim to cut purchases by regulated-rate customers by about 40%, triggering a historic shift in customers transferring to subsidized tariffs.
The four large energy groups with regulated rates added nearly 900,000 new customers to their last-resort trading options in just six months. From 1.58 million TUR customers in September, total TUR customers reached 2.5 million by the end of February, according to data from the Ministry of Ecological Transition.
Even with this large transfer, customers on the free market remain more numerous, though it is typically more expensive and has seen significant increases during the recent winter. Currently, about 5.7 million users stay in the free market. In other words, only around 30% of all users have protection against steep increases, a reality confirmed by the CNMC’s price comparator, which shows regulated rates often remain cheaper than any free-market option.
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