The price of electricity remains stable between 200 and 300 euros per megawatt-hour (€/MWh). Today, 23 March, it stands at 212.44 euros, a slight drop compared to the previous day. The difference in prices between the different price brackets is mainly due to the tolls and charges, which are higher at peak times, intermediate in the low season, and more affordable in the off-peak period. On 23 March, a megawatt-hour will cost 249.3 euros at peak time (including charges and tolls) and 180.28 euros at an off-peak time. The cheapest period will be between 4 and 5 o’clock.
The wholesale market, despite being far from its historical maximum reached on 8 March at 542 €/MHw, is at very high levels and is not expected to fall imminently. Despite the fact that February brought a respite, the also known as the “electricity price” has marked an average of 336 euros per megawatt-hour during the first half of this month.
The government intended to reduce the price of electricity to below 180 euros. They announced it on 17 March but four days later, they backtracked. Now, the government says it is working on other options to achieve greater unanimity within the European Union. The aim of the measure announced by Minister Ribera was to decouple the price of gas from the electricity market if Europe did not take a decision to reform the market.
Gas continues to set the tone for electricity prices. From 1 January to 15 March, consumption of this energy source increased by 12.6% compared to the same period last year. And the driving force behind this growth, point out the experts at the ASE Group, is demand for electricity generation, not industrial demand.
In the last few days, at least, the price of gas on the markets has fallen by 50% from the highs set on 7 March, when the price on the TTF – the major world market – for April exceeded 200 €/Mwh. Nevertheless, the price curve for 2022 is 60% above the pre-war days, and always above 100 euros. “Being indexed to gas, European markets have also seen a sharp decline in recent days,” adds the ASE Group, “but also 2022 futures products have clearly risen since the Russian invasion of Ukraine.
The energy market remains at excessively high levels, which is a major setback for households. The more than 10.5 million households on the regulated electricity tariff that are receiving their February electricity bills these days are once again noticing the high prices at which they are paying for this basic supply. The average PVPC (Voluntary Price for Small Consumers) bill, which until 2021 rarely exceeds 60 euros per month, has risen to more than 130 euros on average, according to calculations by the National Commission for Markets and Competition (CNMC). And the spiral is set to continue, depending on how the wholesale market behaves in this new energy crisis.
Europe has also been affected by the escalation in electricity prices. All European countries are registering prices above 300 €/Mwh). The peak is Italy, with 367 euros, followed by the United Kingdom (350) and France (343). The exception is Germany (295 €/Mwh). Despite being the European country with the highest dependence on Russian gas, it is also the one with the highest self-consumption photovoltaic generation capacity. On 11 March, it even recorded “zero” prices during the hours of maximum solar radiation.
The regulated tariff, the main one affected
The high electricity prices directly affect users of the regulated tariff, the so-called Voluntary Price for Small Consumers (PVPC). This type of supply is configured with wholesale electricity market prices (‘pool’) plus tolls and charges, which represent the regulated bill and are set by the National Commission for Markets and Competition (CNMC) and the Ministry of Ecological Transition respectively.
The former serves to finance the transmission and distribution of electricity. The charges are used to pay for other items such as incentives for renewable energies, part of the costs of bringing energy to the islands, or the amortisation of the tariff deficit. However, consumers in the free market – in which a price is agreed with the electricity supplier for a certain period of time – are also harmed by this inflationary spiral of electricity when it comes to renewing their contracts.
Tips to lower your bill
Getting a cheaper bill involves changing a series of habits. The first of these is to consume as much as possible within the off-peak periods (from midnight to 8 a.m. from Monday to Friday and all weekend hours). It is also advisable to adjust the contracted power as much as possible because you often have more power than you actually use.
Before the generalisation of digital meters, it was almost impossible for a domestic user to know how much power he/she was using. But with the new metering devices, everyone has access to this data. Distributors – the owners of the ‘cable’ through which the electricity reaches the point of consumption – already offer this information on their websites and mobile applications. Another way to reduce electricity bills is to use household appliances efficiently. For example, choosing programmes that work at low temperatures in the washing machine or dishwasher, turning off electric hobs or the oven before the end of the cooking time to take advantage of the residual heat, or eliminating the ‘standby’ to turn off appliances altogether.