The price of electricity for regulated rate customers will drop by 9.11% this Tuesday, to 231.74 euros/MWh

Some 63.5 euros less than those who would have been paid per MWh if the gas price limit had not been applied

MADRID, 4 Jul. (EUROPA PRESS) -

The average price of electricity for regulated rate customers linked to the wholesale market will drop 9.11% this Tuesday compared to today, to 231.74 euros per megawatt hour (MWh).

This price for PVPC customers is the result of adding the average price of the auction in the wholesale market to the compensation that the demand will pay to the combined cycle plants for the application of the 'Iberian exception' to cap the price of gas for electricity generation.

In the auction, the average price of electricity in the wholesale market - the so-called 'pool' - will stand at 139.16 euros/MWh this Tuesday, which is 20.76 euros less than the price for this Monday (159.92 euros/MWh), according to data from the Iberian Energy Market Operator (OMIE) collected by Europa Press.

The maximum price of electricity for this July 5 will be registered between 9:00 p.m. and 10:00 p.m., with 163.58 euros/MWh, while the minimum for the day, of 114.57 euros/MWh, will be between 04.00 and 05.00 hours.

To this price of the 'pool' is added the compensation of 92.58 euros/MWh to the gas companies (a figure that is still provisional and that usually varies compared to the definitive one and affects the percentage variations of the price), compared to 95, 05 euros/MWh registered for today, Monday. This compensation must be paid by the consumers who benefit from the measure, the consumers of the regulated rate (PVPC) or those who, despite being in the free market, have an indexed rate.

In the absence of the 'Iberian exception' mechanism to limit the price of gas for the generation of electricity, the price of electricity in Spain would have been on average around 307.41 euros/MWh, which is around 63.49 euros/ MWh more than with the compensation for clients of the regulated rate, who will thus pay around 24.62% less on average.

Compared to a year ago, the price of electricity for customers of the regulated rate for this Tuesday is 146.92% more compared to 93.85 euros/MWh on July 5, 2021.

The Iberian mechanism, which entered into force on June 15, limits the price of gas for electricity generation to an average of 48.8 euros per MWh over a period of twelve months, thus covering the coming winter, a period in which energy prices are more expensive.

Specifically, the 'Iberian exception' sets a path for natural gas for electricity generation at a price of 40 euros/MWh in the initial six months, and subsequently, a monthly increase of five euros/MWh until the end of the measure .

The Government limited in its calculations to 15.3% the reduction in the receipt to the average electricity consumer covered by the PVPC regulated rate during the 12 months of application of the approved cap on the generation of electricity from natural gas, according to evidence in the impact report that accompanies the decree law and to which Europa Press has had access.

For the industrial consumer, totally exposed to the 'spot' price, the Government estimated a reduction of between 18% and 20%, with the first month of the mechanism oscillating between 15% and 17%, and between 13% and 15% at last.

The prices of the 'pool' have a direct impact on the regulated rate --the so-called PVPC--, to which almost 11 million households in the country are covered, and serve as a reference for the other 17 million who have contracted their supply in the free market.

In fact, the National Commission of Markets and Competition (CNMC) has verified that in 2021, in the framework of the upward spiral of energy, around 1.25 million people switched from the PVPC to a rate in the free market at a fixed price.

The decree law to expand the measures to alleviate the economic effects of the war in Ukraine, approved last Saturday by the Government, includes a reduction in VAT on electricity from 10% to 5%. A year ago, a reduction of this tax from 21% to 10% was approved and now it is reduced to 5%.