The Government has approved the new regulated electricity tariff, known as the Voluntary Price for Small Consumers (PVPC), with the aim of protecting consumers from potential price volatility in electricity.
This new formula will come into effect on January 1, 2024, for consumers, and from July 2023 for reference retailers.
The reform seeks to partially incorporate long-term price signals and reduce reliance on spot markets, providing greater stability to users’ final bills. However, it is expected that this new methodology will not have a significant impact on price levels.
Additionally, a volume risk premium component will be introduced to ensure the economic balance of reference retailers. As of January 1, 2024, households and micro-enterprises with a contracted power of up to 10 kilowatts will be able to join the regulated tariff.
Prices
The government has not provided any estimate regarding the final price of the “pool” or the possible impact on the electricity bill of this new methodology. Sources from the Ministry for the Ecological Transition and Demographic Challenge (MITECO) emphasize that this reform will act on volatility, but it is not clear whether it will have an effect on price levels due to the introduction of a greater weight of long-term prices.
With this reform of the PVPC (Voluntary Price for Small Consumers), a partial indexing of the spot markets is carried out by incorporating references from the futures markets that, in theory, will provide greater stability to the final bills of consumers.
Read more in Ministry for Ecological Transition and the Demographic Challenge site.
