New electricity rates

The new tariff system is not a new idea. It was to be implemented on 1 November 2020 and was postponed until 1 April, when its application was also postponed. Now, on June 1, a new tariff structure will come into force that will affect domestic and small business contracts with a contracted power equal to or less than 15 kW. The rate change will be done automatically.

From now on, everyone will have time discrimination, differentiating between expensive and cheap hours, and the new fare system will involve two major changes: we jump to three time slots and two powers.

Three time slots

Time slots are not regular throughout the week or every day of the year. There are a few stretches on weekdays and they disappear during weekends and state holidays.

Workers:

· Valley period (P3): from 0 to 8 hours. Schedule with the lowest rate.

· Flat period (P2): in the morning from 8 to 10 hours and in the afternoon from 14 to 18 hours. Intermediate rate.

· Peak period (P1): from 10 am to 2 pm and from 6 pm to 10 pm. It is the schedule with the most expensive fare.

On weekends and on state-wide public holidays, there will only be a valley period 24 hours a day, the cheapest.

The current rates will disappear: 2.0A, 2.0DHA, 2.0DHS, 2.1A, 2.1DHA and 2.1DHS; all will pass at 2.0TD rate.

Two differentiated contracted powers

For the first time there will be two differentiated powers with two different contracted power prices. This will be optional because we will always be able to maintain the same power value. The most economical part of the power will coincide with the valley period, both on weekdays and weekends.

· Flat and peak period (P1-P2): from 8 am to midnight on weekdays

· Valley period (P3): from 0 to 8 hours on weekdays plus all weekends and state holidays.

Tips to pay less

1. We review the contracted power. Power is the electricity consumption at a given time, adjust the contracted power to the reality of your home. In addition, half of the households have more than enough power. Think that untapped power is an extra benefit for the contracted power company.
2. Avoid making large consumptions during peak periods. We need to manage and control when we make intensive use of electricity.
3. Make the most of the economic rate for the weekend.
4. A new power for the electric car. We take advantage of society’s low consumption at night to make intensive use of electricity to charge the electric car. You can hire a higher power during the valley period, with cheaper power and electricity rate.

How to understand the light bill

On our electricity bill, we pay for the electricity we consume (for energy consumed), but also for being connected to the grid, whether we use it or not (for contracted power), we must also pay the electricity meter, usually on a rental basis, and various taxes.

Contracted power

  It is all the possible energy that the consumer can use at a given time. Depending on the power contracted, you can have more or less appliances connected at the same time without the leads falling. It is what we pay to have a certain electrical capacity available at home, whether you consume it or not. We could say that you pay so that, at any time and without notice, the system is available. It is important not to have contracted more power than necessary, because it is a fixed cost on the bill.

And how do you know what power you need?

So it depends on the dimensions of the house, the electrical appliances that are there and the use that is made of them. Since last October it is easier to adjust the power. It can now be contracted in 0.1 kW bands. (provided that the power does not exceed 15 Kw). It must be borne in mind, however, that both going up and down the power has a cost that the customer has to pay, but in the long run it will pay off. But beware, because your electric company will hardly advise you on this. Within this fixed term of the bill you are also paying the bulk of the company’s access tolls and commercial margin.

Energy consumed

  It is the price that the energy consumed during the billing period costs. It is measured by kwh consumed. It is the variable part of the bill and will go up more or less depending on the consumption made of it and the price of electricity, in the case of being in the regulated market. It is an energy price that already includes a minimum part of the tolls and also other costs that we detail later.

Rental of measuring and control equipment: This is what is paid for the rental of the light meter.

Taxes:

- Electricity tax: It is set by the government. It is 5.112696% of the sum of power and consumption, the two previous concepts.

- VAT: 21% of the tax is applied on all other items.

What are tolls and why do I pay them?

1.-A part of what we pay are taxes, approximately 21%,

2.-A second part is what it costs to produce electricity, approximately 30% of everything we pay:

- Capacity service costs: the money received by generating companies for the capacity they put on the market to ensure that supply does not fail.

- The costs of the adjustment service: Negotiated in the daily and intraday market, which serves to readjust production on the fly if there are mismatches in demand or production), and, finally, some costs for the peninsular interruptibility service -to deal with unexpected supply losses or extraordinary peaks in consumption, according to this service, in such a situation, the big industry, the big consumer, agrees to reduce its consumption, so that there is no lack of energy in the rest of consumers, in return he receives a reward.

3.-And the rest, 60%, under the heading regulated costs, refers to the bulk of costs and tolls associated with the electricity system, set by the ministry and reviewed annually. We already see that they represent the bulk of the bill. Costs that have risen sharply in recent years and are responsible for the increase in the bill:

- Transport costs (for long distances through other voltage) and distribution (medium and low voltage)

- Costs of the bodies involved in the operation of the electricity system - Costs for the compensation of the extrapeninsular generation (the electrical systems of the Canary Islands are not connected to the peninsular systems and this has an extra cost that also compensates all consumers in the bill).

- Premiums for renewable energy, cogeneration and waste. It is a way to encourage the generation of clean electricity.

- Costs associated with the nuclear industry, such as the treatment of nuclear waste. It remains to be seen whether the government's recent announcement to close nuclear power plants before 2030 will also have an impact on the consumer bill.

- Costs associated with the tariff deficit. (The tolls imposed by the government year after year have been insufficient to pay all these costs and have generated tariff deficits that have been accumulating, and that we are still paying.)

How does being on the free or regulated market affect me?

Being in the regulated market, with the PVPC tariff (voluntary price for the small consumer) or in the free market will determine that what you pay for energy consumed varies or not, even if you consume the same, month after month.

Free market

  Each customer agrees on a price per kilowatt hour with conditions that are normally year-round, so they are not affected by light surges, but they also do not benefit from the drops. A kind of flat rate.

Regular market

The price of the kwh is decided in the well-known "electric pool", depending on supply and demand, and changes every hour. Therefore, the bill may vary from month to month, even if the consumption is similar. Therefore, a rise in light affects only those in the regulated market, in the same way that these are the only ones who benefit if there is a decline.

And what is the "pool"? It is the new pricing system that was decided in 2014, after a controversial auction in December 2013, which was to set prices for the first quarter of 2014 - then prices were set quarterly. At that auction, prices skyrocketed and suspicions of possible manipulation forced the government to freeze prices and create a new system, which we have today. A system where the next day's prices are negotiated every hour. For example, at 14:00 today we negotiate the price that will have the light tomorrow at 14:00.

It is also an auction between those who produce energy (solar plants, hydroelectric plants, wind farms, nuclear power plants ...) and marketers who want to buy it and then sell it to their customers. Every hour there is a break between supply and demand and there is a price to which must be added, but a whole series of tolls and costs of the electricity system (also included in the bill, ie we also pay them).

All consumers can consult the page of OMI-Polo Español SA (OMIE), the operator of this daily energy market, the prices it costs to produce electricity every hour, the strict cost of production; a price to which will still have to be added the system costs and tolls paid by all consumers.

Another source is the page of Red Eléctrica de España (REE). Here you can check, from 21:15 the regulated prices that will apply the next day. These are prices where, in addition to the cost of producing energy, the part of the corresponding tolls and other costs of the system have been added. Thus, those in the regulated market can know in advance whether it will be cheaper to put a washing machine or make a cake in the oven at four in the afternoon or at nine in the evening.