Another twist to our “friendly” electric bill It's here, but until when?
If you remember, just 3 months ago, It seems that someone noticed, finally, that The electricity auctions were anything but clear, especially as the day approached when its value was used to set the Last Resort Rate (TUR).
For those who didn't know already, the price of electricity in the market (not the one we domestic consumers have been paying), is auctioned daily between various agents: generating companies, banks, investment funds,… (the crême de la crême), which causes prices to rise more on some days or less on others. But, once every 3 months, in addition, it was produced the CESUR auction: the one that serves as a reference to mark the TUR for citizens (powers < 10 kW); logically, individuals were not going to buy energy from the market, but rather they adhered to this “regulated” price for convenience and security.
If we go to This article that I found on “fedeablogs”, we can see the following graph:
We have the BLUE color (what we ordinary mortals pay) and the RED color (what large consumers pay). The light is the same, but to the naked eye, It seems that people were paying more money for the same thing, approximately a 11%, as mentioned in the own articleI would like to know the answer to this hypothesis, but my humble knowledge of the subject does not allow me to do so.
The result of the CESUR auction was used to set the price of electricity quarter by quarter; hence its continuous ups and downs (more ups than downs) during these last months. A specific day was taken as a reference, but it was possible to see how on other dates the prices dropped considerably, but their destination was not the citizens, but the large consumers. So, what will happen tomorrow?
The new Voluntary Price for Small Consumers (PVPC) – TAKE IT NOW!
Very simple, the CESUR auction disappears and we all started paying for electricity at the auction price on the market, the one with the red lines in the graph above. And so that we all know how the new rate is going to be calculated, they have published a Royal Decree (as it could not be otherwise).
Trying to explain it so that everyone understands: if there is an electricity auction every hour, based on the electricity needs throughout the Spanish territory, In each of those hours the price of the electric kilowatt will be different from the previous one..
The new PVPC will have 3 concepts:
- The purchase price of electricity on the market: this is how we pay the power plants.
- Access tolls: where we pay for electricity to reach our homes through Red Eléctrica de España.
- Marketing costs: the part corresponding to the person who bills us for electricity.
The first of these is the one that will go up and down every hour; the tolls and marketing, I understand, will be constant, during regulated periods of time. To this, we must add the contracted power term, the corresponding taxes and the rental of the meter, if applicable.
Why this change?
Following what was said at the beginning of the article, the aim is to avoid suspicions when setting regulated prices and to allow competition to be as real as possible. It is unacceptable that hydroelectric power stations are stopped during periods of heavy rainfall, because the price “had to be set” by the CESUR; and with the new regulation, it seems that all of that is going to be avoided. What happens is that, when the 80% of the market is dominated by large companies, this can be very complicated.
Consumer choices.
To generate an “understandable” electricity bill from now on, we will have the following options to choose from:
- PVPC rate (new TUR): it will depend on the type of counter we have:
- Digital meter integrated into the remote management system: we pay our actual consumption hour by hour, based on the PVPC of successive auctions.
- Analogue meter or non-integrated digital meter: we pay our accumulated consumption from reading to reading, at an average price of the different PVPC auctions that have taken place in the billing period.
- Alternative offer from the marketing companies: for those who prefer to ensure a constant price for the electricity they consume, they will be offered a price for the entire year: they will not pay one price for electricity one day and another the following month, depending on whether there is more or less contribution from renewable energies to the energy mix.
- Option to go buy electricity at free market.
We must not forget that all this intricacy of regulation and prices only affects a part of our bill. For some it will be a higher percentage than for others, so there may be customers who are not at all affected by putting the washing machine on at one time or another, because what they pay in fixed terms and taxes is more representative than what they consume daily with electrical appliances.
Obtaining the price of the electricity auction.
The price matching methodology is simple, although in my opinion, not as fair as it should be. Electricity producers offer their energy packages at the price they consider appropriate; we must know something specific: renewables (wind, hydro, photovoltaic) and nuclear, offer at ZERO or well below the final price. This is because the former are obtained from free energy sources (sun, wind and water), and in nuclear it is too expensive to stop the plant, so they cannot afford to be left out of the toast. Thanks to them, the auction price is lower than if we only burned fossil fuels such as those derived from oil, gas or coal.
If we look at this graph, we see the following:
- Red line: marks the energy offered, from ZERO cost to increasing depending on what the seller needs for their own viability.
- Gray line: marks the purchase offers. The first section are customers who are going to buy no matter what; but at a certain point, the line begins to descend thanks to those who are not willing to pay for electricity at any price.
The point where the two graphs meet means the balance between demand and supply: in the entire red line strip that has entered into the matching, €27/MWh will be received in the specific case of the image shown.
We do not know the final result.
Will the electricity go out? I hope so, but until a few months have passed, we will not see the outcome of this whole mess based on something as basic to life as electric light.
What is clear is that all these comings and goings in the energy sector are of little use to ordinary Spaniards, who have been hit hardest by the crisis and who seem to pay more taxes than anyone else because their paychecks have already been cut.
Cover image source: http://blog.tradesmen.ie/2011/09/electricity-price-comparison-ireland-october-2011/
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
