The CNMC considers that the savings from the new Ribera electricity rate are null

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The National Commission for Markets and Competition (CNMC) considers that the new regulated electricity tariff proposed by the Ministry for the Ecological Transition would have little effect on its objective of reducing price volatility.

“On average, does not represent a relevant gain in stability for this type of consumer“, he points out in his report to the Royal Decree project to modify the calculation methodology of the regulated electricity tariff, which the department headed by Teresa Ribera published in October of the year.

Specifically, Competition states that “taking into account the monthly billing of consumers covered by the Voluntary Price for Small Consumers (PVPC), the volatility between months within each year calculated as the standard deviation observed from 2014 to November 2022, is It places the megawatt hour (MWh) on average at about seven euros, which would mean, for an average consumer (2,600 kWh/year), about 1.7 euros more in some months to pay 1.7 euros less in otherswith respect to the current methodology”.

On the other hand, the body chaired by Cani Fernández recommends to the Government review the methodology applied to vulnerable electricity consumers and, in particular, “reflect on the advisability of the social bonus discount being calculated on the price of the Voluntary Price for Small Consumers (PVPC).

Non-binding report

The CNMC gave the go-ahead to the mandatory report on the new regulated electricity tariff proposed by the department of Teresa Ribera on December 16 in an extraordinary plenary session, as reported by La Información. Now, he has made his report public with a series of nuances, although it is not binding and the final decision remains up to the Executive.

It was in October 2021, after several months with the price of electricity skyrocketing, when the Ecological Transition launched a public consultation to modify the PVPC, but it came to nothing. The process was resumed after the European Commission (EC) imposed a tariff review on Spain as a condition for approving the Iberian exception.

The current regulated tariff was introduced by the Electricity Sector Law of 2013 and is regulated by Royal Decree 216/2014. Consumers have a contract with reference marketers (COR), designated by the Ministry for Ecological Transition, and a contracted power of no more than ten kilowatts (kW). It is also the rate that allows vulnerable consumers to benefit from the electric social bonus.

In the current context of energy crisis, aggravated by Russia’s invasion of Ukraine, the Executive has prepared to reformulate the calculation of the cost of electricity production to provide the PVPC with “greater stability” while at the same time preserve market (hourly) and medium-term price signals. The regulator recommends that the Government wait until the end of the application period for the Iberian exception, on May 31, to evaluate how the new proposed methodology would turn out. What the Competition did not know is that the Executive will fight in Brussels, together with Portugal, to apply the cap on gas for electricity generation until the end of 2024. Spain will also present its proposal on Tuesday to reform the electricity market

price signal

What the Executive intends now is introduce a price signal to forward productsconfiguring this as a basket with reference to the market managed by OMIP, which includes a distribution of weights between the monthly, quarterly and annual product.

If the Government does not make modifications after the CNMC report, the distribution would be made in such a way that the monthly product represents a 10% of the total, the quarterly product is 36%, and the annual product is 54%. Likewise, a transitory framework is established by which the representativeness of the term signal will increase gradually for the period 2023-2025, in such a way that, for the first year, the weight of the signal is 25% and will increase. 15% until reaching 55% in 2025, leaving the remaining 45% for the daily and intraday signal.

“The weighting percentages of forward products for 2023 should be adapted taking into account the lack of time available for the reference traders to go to the markets to cover themselves with the annual product for 2023,” indicates the CNMC.

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Ribera has saved the possibility of introducing, by ministerial order, modifications in the weight and distribution of the products on timeincorporating, where appropriate, a reference to the price resulting from the inframarginal, manageable and non-emitting energy auctions, in the event that these auctions finally provide for the participation of the reference marketers.

Among the list of companies that have submitted allegations to the electricity advisory council, are Endesa, Iberdrola, Red Eléctrica, Naturgy and Repsol.

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