The price of electricity reaches this afternoon the maximum in what goes from year

The cost of energy for customers who are welcomed to PVPC, tariff utilizing about half of Spanish households, varies every hour. So, for all users who have a smart meter effectively integrated into telemanagement system, and are subscribed to this type of fare, prices this afternoon for a few hours will be shot. The PVPC includes term of energy of tolls of access (a fixed cost that establishes Ministry of Energy), charges and cost of production. It does not include taxes.

The value of megawatt per hour for PVPC, which between 16 and 17 hours will be around this Monday 120 euros, will increase abruptly between 17 and 18 hours, reaching 170 euros. And in later hour, between 19 and 20 hours, it will climb to quoted 182.54 euros, surpassing level reached 25 of January last, in time slot between 21 and 22 hours, in which y touched 182.05 euros, maximum recorded so far in what goes of year .

Extend photo evolution of price of megawatt per hour in what goes of year. Click on image to enlarge it.

The ultimate cause of this sudden and temporary increase has not been detailed eir by Ministry of Energy or by companies. The electric invoice has three components: one that derives from wholesale auction between electrics; Fixed tolls that determine administration and so-called "adjustments". In most cases, increase is due to fluctuations of auction because tolls are frozen. But on rise of afternoon of this Monday, increase is due almost entirely to "adjustments", without being determined which are.

Is situation as troubling as in January 2017?

Prices today, for a few hours, will surpass even those of January record moment. However, rise is concentrated in a very specific period of time. In January, it was held throughout day and several days, because wholesale prices of auction were elevated for more than a week, in need to use gas and coal. Moreover, in those days, level of demand grew a lot coinciding with cold wave that hit peninsula.

The prices applied for PVPC for days and hours can be seen on this web page of Red Eléctrica and E. Sios, system of information of operator of systems.

In principle, in case of today, demand for this time of year is inferior to that of or exercises and is well below those that are recorded during summer heat waves (by greater use of air conditioning apparatus) or colder days of Winter (in few areas of Spain is still needed heating during day).

A matter of "adjustment"

The cost of KW for PVPC users depends on three elements (to which taxes are added): The price of wholesale auction (according to source of production, is higher or less), part of tolls (a fixed cost and that establishes Ministry of Energy (a) and a third element, called "setting". This third section is one which, according to several experts, would be diverting prices today.

Within this concept is so-called additional power reserve to go up, a service that was launched four years ago and serves to replace production of plants with plants of anor type, when first, for one reason or anor , stand by, explains Jorge Morales, director of next energy marketer. The costs of this service are shot today at end of day, affecting this way at final price.

In order to know specific nature of this substitution — which plants have eventually stopped electricity generation and why; In which areas of Spain demand exceeded available offer? — it will be necessary to wait a long time, because details of daily offers by producers cannot be known immediately. However, spokesperson for Consumer and user organization, Ileana Izverniceanu, has announced that it has already asked National Commission on Markets and Competition (CNMC) to explain why this rise has taken place.

Less hydraulic and more combined cycle

As for auction, it is also important to note that contribution to production of combined cycle, which is put in place when re are problems of supply of or sources and that works with gas and coal — a more expensive method with respect to ors — , today will be 25.1% compared to 17% of October 24 (which, having been a Monday, is taken as a reference from a year ago comparable to today). This October 23, at most expensive hour kilowatt/hour for PVPC will cost about 182.5 euro. A year ago, on Monday 24 October 2016, it cost 132.79 euros.

On contrary, cheaper hydraulic generation is today low, only 3.4%, compared to 10.3% of just a year ago, due to low level of reservoirs by drought. According to assessments of experts consulted, recent rainfall has not improved situation in a relevant way.

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After analysing se data, industrial engineers advise to displace energy consumptions of household outside time slot from 18 to 22 hours, which will reach very high prices. From FAIIE point to Government fact that a gradual increase in electric energy prices is seen since end of August. Therefore, "it would seem advisable to adopt some kind of measures to moderate m," y suggest.

Better regulated or free fare?

The price increase of hours of this afternoon affects about half of consumers, those who have hired electric service through commercialization in PVP. For rest, in which most companies and businesses are counted, is subject to so-called free rate, which is fixed each year with marketer by contract (can be a flat rate, or revisable in pre-determined timeframes, or a quota that may vary according to what and establishes with its client company that commercializes Energy).

is regulated tariff or free market cheaper? On. The free rate is subject to offers agreed by consumers with electric, while regulated or PVPC is influenced by wholesale prices. The wholesale prices are fixed every day in wholesale auctions, where electricity is bought to producers, which makes cost of kilowatt is subject to conditions of production of each day and even hourly. However, in periods of strong increase in this price, many users wonder if it is not worth going to free.

A CNMC report that compared two rate rates in 2016 indicated that regulated ones were 5% more convenient than free, average rates. It must be taken into account, however, that study referred to last year and that data can change from year to day. Which means that re is no element to ensure that in 2017 this advantage is confirmed.

A problem since start of 2017

Consumers have already suffered a sharp rise in energy prices for regulated tariff at start of year. In January, in midst of cold wave, kilowatt began to rise in wholesale markets and, hence, moved to variable part of light receipt of those households with PVPC rates. At that time, re had been a kind of perfect storm: need to buy energy produced by combined cycles before low hydro-electric and wind production, it was added that Spain hardly received electricity of French nuclear origin, for The halt of much of centrals of that country.

In face of escalation of prices, Minister of Energy, Tourism and Digital Agenda, Alvaro Nadal, announced at a press conference that delegated Committee of Government of Economic Affairs had adopted a series of measures to increase supply of gas in market and to Cheaper prices. Nadal admitted that operation of gas market (which feeds combined cycles) was better and that increase in natural gas put pressure on wholesale electrical market. To do so, he said that a market "creator" would be put in place to get more gas supply and more competition.

However, at least for time being, winter arrives and those measures do not seem to have been too much of an effect. In fact, CNMC urged Ministry of Energy to approve obligations to be met by dominant operators of gas (Natural Fenosa and Endesa) sector to act as market makers, a measure that energy will not apply immediately. The control body recalled that, although it had improved slightly, volume of gas negotiated through Mibgas remained scarce, only 2% of total demand in Spain in its first year of operation, a level much lower than in or markets European.