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The government sets October 1 as the deadline for preparing a new methodology for calculating the adjustable rate.

Latest NewsThe government sets October 1 as the deadline for preparing a new methodology for calculating the adjustable rate.

The long-awaited cap on the price of gas and coal for electricity generation, through which the Government commits itself to lowering the wholesale price of electricity by more than 30%, is accompanied by a promise to Brussels: to prepare, by next October 1, a regulated tariff master line, or PVPC. While the government predicts these changes won’t formally go into effect until “early 2023,” this fall, the executive branch will have to make “necessary changes” to cover the “new method of calculating” the rate for nearly one in four households and seven out of ten industrial customers entered into an electricity contract.

The main goal of the reform will be to reduce the volatility suffered by those with a PVPC contract, especially after what happened last year, when a sharp increase in the price of natural gas, the cost of which increased five times, led to exponential growth . increased your score. The escalation of electricity, much faster than in the free market, where conditions are negotiated by the customer with the trading company and remain unchanged for a year or more, has also affected the most vulnerable families covered by social insurance. bonus.

European “state”

It is critical to break this direct link between spot prices – the most volatile: they change hour by hour and day by day – and the electricity bills of some 10 million customers covered by the regulated market. So much so that in a royal decree published this Saturday in the Official State Gazette (BOE), the executive branch admits that “one of the conditions” imposed by the European Commission to give the green light to the gas cap is precisely reform of the voluntary small consumer price ( PVPC).

Although without giving details, the legal text offers some clues as to what this future regulated rate will look like. Unlike what is happening today, the price that these households will pay will not only be affected by the direct price of electricity (from one day to the next), but part of it will be determined by the futures markets, month, quarter, or even a year ahead. This is how regulated tariffs are calculated in Portugal, a country with which Spain shares the electricity market and from which the design of the new system could be inspired.

Additional Information

He thoroughly knows all sides of the coin.

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However, in the future calculation model, the Ministry of Ecological Transition does not want the link between PVC and very short-term markets to disappear completely – within an hour or a day – in order to prevent households and companies from losing the incentive to adjust their consumption to times or days when the electricity system produces cheaper and cleaner electricity, either due to the abundant supply of renewables or falling demand. According to the government, it is about “incorporating (…) a certain exposure of these consumers to a short-term price signal. [que] encourage energy efficiency, storage and demand management.”

Gas limit, bridge before regulated tariff change

The executive branch expressly admits that the emergency adjustment, which will limit the price of gas and coal for thermal power plants in order to reduce electricity prices, is nothing more than an “emergency measure while this reform is carried out and takes effect effectively, which is not immediately” . In other words: the rapid intervention in the electricity market, through which the Spanish authorities seek to significantly reduce price pressures, is only a bridge until the new PVPC rate is ready. “The adjustment mechanism regulated by this royal decree-law will in no case be applied after May 31, 2023,” the text of the law says.

Even though the Bank of England has already published a cap on gas and coal, it will still have to wait to take effect. First, because the internal government gives the electricity companies and the system operator 12 days to adapt to the new conditions. And second, and more important, because the final approval of the European Commission is still missing. There is no date yet for this latest step, but the government says it will come “very soon” in the decree. In any case, the express change will not take effect until June is billed. Always looking forward to the PVPC reform that will come into effect early next year.



Source: elpais.com

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