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    The price of electricity at regulated tariffs falls 17% today to 227 euros MW/h

    June 24, 2022 - CE Noticias Financieras


      Regulated tariff customers linked to the wholesale market will see today how the price of the electricity they consume will fall by 17%. The average price will fall this Friday compared to yesterday to 226.9 euros per megawatt hour (MWh). The highest rate will be reached at night, between 23.00 and 24.00 hours and the cheapest in the afternoon, between 17.00 and 18.00 hours. This decrease in the tariff for PVPC customers is the result of adding the average price of the auction in the wholesale market to the compensation that demand will pay to combined cycle power 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 this Friday at 137.59 euros/MWh, which is 12.27 euros less than the price for yesterday (149.86 euros/MWh) and a decrease of 8.18%, according to data from the Iberian Energy Market Operator (OMIE) collected by Europa Press.

      The maximum price of electricity for this June 24 will be recorded between 23.00 and 24.00 hours, with 191.52 euros/MWh, while the minimum for the day, 111.70 euros/MWh, will be between 17.00 and 18.00 hours.

      To this pool price is added the compensation of 89.31 euros/MWh to the gas companies, compared to yesterday's 123.57 euros/MWh. This compensation has to be paid by the beneficiary consumers of the measure, the consumers of the regulated tariff (PVPC) or those who, in spite of being in the free market, have an indexed tariff.

      56 euros less due to the 'Iberian exception'.

      In the absence of the 'Iberian exception' mechanism to cap the price of gas for electricity generation, the price of electricity in Spain would have been on average around 282 euros/MWh, which is almost 56 euros/MWh more than with the compensation for regulated tariff customers, who will thus pay around 20% less on average.

      With respect to a year ago, the price of electricity for regulated tariff customers for this Friday is 164% more than the 85.73 euros/MWh that the pool set on average for June 24, 2022.

      The Iberian mechanism, which came into force last June 15, limits the price of gas for electricity generation to an average of 48.8 euros per MWh for 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 thereafter, 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 bill for the average electricity consumer on the PVPC regulated tariff during the 12 months of application of the cap approved for electricity generation from natural gas, according to the impact report that accompanies the decree law and to which Europa Press has had access.

      11 million households

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

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

      In fact, the National Commission for Markets and Competition (CNMC) has found that in 2021, as part of the upward spiral of energy, around 1.25 million people switched from the PVPC to a fixed-price free market tariff.

      In addition, the President of the Government, Pedro Sánchez, announced on Wednesday that the decree law that the Council of Ministers will approve this Saturday to extend the measures to alleviate the economic effects of the war in Ukraine will include a reduction of the VAT on electricity from 10% to 5%. A year ago a reduction of this tax from 21% to 10% was already approved and now it will be cut to 5%.


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