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Spain to introduce new electricity tariff aimed at avoiding price spikes
The energy measure should reduce the cost of electricity bills for 8 million consumers in Spain
This Tuesday, June 13, the Spanish government will approve a new pricing structure for the PVPC regulated electricity tariff aimed at reducing the volatility of energy bills and avoiding the cost hikes experienced by so many households over the last 12 months.
At the moment, the PVPC, or Voluntary Price for the Small Consumer, is directly linked to the electricity market, so the cost of each kWh fluctuates hourly and is heavily dependent on energy companies and the Spanish retailers that then sell this electricity on to their customers.
When the new system comes into force at the beginning of 2024, electricity prices will still be linked to the market but will also rely on longer-term pricing, which should avoid the dramatic highs and lows and, ultimately, reduce bills.
"What we have done has been to introduce correction factors so that the rate reflects to a large extent the daily market price but also the prices that reflect the future markets, three months, one year," explained third vice president, Teresa Ribera.
The move should benefit around eight million customers in Spain who will hopefully see their electricity bills continue to stabilise over the two-year transition period, by the end of which the daily energy auctions will only determine 45% of the price. The remainder will be set based on longer-term contracts.
With the reform, low-income and large households will still be able to take advantage of the electric social bonus, which offers vulnerable families additional discounts on their bills.
In more good news for consumers in Spain, the government has confirmed that it will maintain the VAT reduction on basic grocery items beyond the June 30 expiry date, until food costs stop rising. The ministers are also analysing extending a number of other money-saving measures, such as the subsidised tickets for city buses.
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