What’s happening with electricity prices and how it will affect consumers.
The price of electricity on the wholesale market as of Tuesday, January 12, 2021, was 84.25 euros / megawatt hour (MWh). It should be noted that this is more than 10 euros below the historical high price (94.99 euros / MWh), which was reached on Friday, January 8. This is official data from Operador de Mercado Ibérico de Eléctrico (OMIE).
The price of electricity on the wholesale market directly affects the electricity bill of all consumers, even those receiving social bonuses or identified as vulnerable.
According to the simulation National Commission for Markets and Competition (CNMC), in the first eight days of January, the receipt of electricity by a consumer with an installed contracted capacity of 4.4 kilowatts and an annual consumption of 3,000 kilowatt-hours (250 kWh per month) at the regulated rate or price for small consumers (PVPC) will reach 54.22 euros. This figure is 30.8% higher than the value of the bill for the first eleven days of 2020, which was €41.43, and will even exceed the value for the whole of January 2020, when the amount reached €54.22.
On Friday, January 8, coinciding with the first heavy snowfall left by Hurricane Philomena, demand reached a high of 42,226 MWh since 2012, although it did not surpass the all-time high of December 17, 2007.
It should be noted that the increase in electricity prices coincided not only with the arrival of Hurricane Philomena and a sharp drop in temperature, but also with a drop in renewable energy production. The absence of solar and wind forced the grid to use gas and coal reserves, which caused prices to rise.
The government plans to start drafting legislation this year that will make it possible to create a fund that will remove the fixed costs associated with financing renewable energy from a regular consumer’s electricity bill. A measure that will reduce the consumer’s bill by 13% in five years and will be supported by contributions from sellers of electricity, gas and petroleum products based on their sales.
Government spokesperson Maria Jesus Montero explained on Monday that the increase in the price of electricity represents only part of the electricity bill, so the increase will not be linearly transferred to the consumer and that it will be necessary to wait for the final outcome of the effects of the events of the last few days.
The Organization of Consumers and Users (OCU) suggests that consumers use appliances and heating systems wisely to reduce their energy bills. According to the recommendation, a residential temperature of 19-21 ºC is optimal, and at night it should be reduced to 15-17 ºC.