Today the Council of Ministers will approve the new reform of the regulated electricity tariff or also known as RRP rate (Voluntary price for the Small Consumer). This new option wants to avoid price spikes for the next year 2024, although the National Market and Competition Commission does not look favorably on this new formula, since a few months ago they warned that it could lead to a price increase.
Over the last year and a half, the price of electricity in Spain It has only given consumers headaches, both families and businesses. And, for this very reason, a series of measures have been taken by the Government of our country. In this case, the Council of Ministers will approve today, Tuesday June 13, the reform of the regulated electricity tariff with which, from 2024will no longer only be linked to the daily electricity market, but will also be supported by longer-term pricing.
This new formula seeks to reduce “volatility”
At the beginning of 2024, the daily electricity market will no longer be linked to the RRP rate of light in Spain. In this way, as stated by the third vice president, Teresa Ribera, the search is for «reduce volatility«, since this new formula that is approved today by the Government will be supported in an additional way in the fixing of prices in the medium and long term.
With this they also want to get avoid price spikes next year, as they already happened during the past year on a daily basis. In addition, it must be taken into account that this regulated electricity tariff is present right now in more than 8 million homes in Spainthat is, 35% of the country.
The goal is that this PVPC calculation formula pay attention to prices in the medium and long term to avoid price spikes for consumers, but without ever losing the short-term cost that this may entail, since these prices can encourage savings and efficient consumption.
Enters into force at the beginning of 2024
When it entered into force, from the Government they assure that «with the turbulence of last year we realized that it was also unsafe if they were to live again«. Although they affirm that it has been the most convenient option since it was introduced. To correct it, Ribera explained that they have introduced “correction factors making the rate largely reflect the daily market price, but also prices that reflect futures marketsthree months, one year«.
Therefore, the daily electricity auctions will determine only 45% of the price, while the rest will be fixed depending on the medium and long-term contracts. And among the novelties, micro-enterprises will also be able to opt for this new formula to pay for electricity and consumers of the PVPC rate will also have to contribute to their bills to the payment of discounts of the electric social bond.