Ribera believes that the reform of the PVPC tariff will give "stability"but admits possible "small increments"

June 13 () –

The modification of the calculation methodology of the Voluntary Price for Small Consumers (PVPC), the regulated electricity tariff, approved this Tuesday by the Council of Ministers will imply “much more stable” bills and “less subject to the risks of great volatility”. , stated the Vice President and Minister for the Ecological Transition and the Demographic Challenge, Teresa Ribera in a brief appearance before the media.

“What we are going to have for sure is a much more stable rate, less subject to the risks of great volatility,” said Ribera, who, however, has admitted that this could lead to a “small increase in the average cost” and, “promptly”, in “reductions with respect to the average cost”.

From a technical point of view, Ribera explained that the new rate incorporates a series of percentages that correct the direct relationship that currently exists with the ‘spot’ market price because they link it to the expectation of prices in forward markets.

“Obviously, if the futures market turns out to be cheaper than what later finally materializes, an effect of a lower price could be produced in the price we pay today,” he gave an example.

Ribera has stated that the change will mean introducing “a kind of risk coverage, a risk premium”, which will result in “less dependence on that price fluctuation on a day-to-day basis”.

The head of Ecological Transition has admitted that “the safest is what we had”, referring to a rate directly linked to the evolution of the wholesale market price. However, in 2022 it stopped offering prices “within a reasonable range” and made it “very difficult” for consumers to assume “such skyrocketing” increases in their bills.

ELECTRICAL REACTIONS

For their part, the electricity companies have valued “positively” the modification of the regulated electricity tariff, to which some nine million consumers are covered, around 34% of all domestic consumers, because it will provide more price stability for small consumers. .

According to them, the new mechanism does not completely lose the hourly variation of prices, giving the appropriate signals for demand to transfer its consumption to the hours of lower prices, at the same time that it will generate more liquidity in the forward markets, given that the Retailers will have incentives to buy electricity on time, replicating the PVPC basket.

The employers of the sector remember that for a long time they had been demanding a mechanism that would reduce the link of the PVPC to the daily market and that would take into account the more stable prices offered by the forward markets.

Likewise, it recalls that the approval of this reform allows Spain to fulfill a commitment acquired with the European Union and that was reflected in Royal Decree-Law 10/2022, of May 13, which temporarily established the adjustment mechanism of the production costs of gas power plants known as the “Iberian exception”.

The approval of this mechanism was conditional on the reform of the PVPC methodology, in order to reduce the volatility of the daily market, through the procedure of introducing a reference to a basket of forward market products in its determination formula ( annual, quarterly and monthly).