The European Commission has sent a strong message to the Member States that still maintain regulated electricity rates: it is time to prepare for their end. In his latest report Regarding the retail market, Brussels requires countries like Spain to develop clear roadmaps with defined deadlines to transition in an orderly manner towards prices based purely on the free market.
Why do you demand change? The underlying objective of the European Union is that everyone operates under the same rules in the free market. The European Commission considers that, if the Government intervenes in prices, citizens lose the incentive to be efficient with energy and competition between companies is stifled in the long term. Therefore, the official document ask for a step-by-step exit planwith specific milestones and guarantees of non-discriminatory treatment, to gradually disconnect this rate without creating chaos in the sector.
Besides, how to underline The Economist, There is a strong component of financial risk prevention. Brussels wants to avoid at all costs a repeat of the cascading bankruptcies experienced during the energy crisis of 2021 and 2022. To achieve this, the European recommendation involves strengthening financial supervision, forcing marketers to undergo “stress tests” and present periodic reports on their hedging strategies against the volatility of wholesale prices.
The weight of the intervened tariff in Spanish homes. The European mandate collides with the reality of our country. In Spain, 29% of households continue to benefit from this intervened rate, the Voluntary Price for Small Consumers (PVPC). According to the National Markets and Competition Commission (CNMC)the magnitude is even greater since 33.5% of those surveyed claim to have hired it. Although Brussels admits that regulating prices may be justified temporarily to protect consumers during a transition, it strongly warns that these interventions should not become a permanent element of the system.
The Government stops the measure dead. Despite the European guidelines, the Spanish Government has no intention of stepping on the accelerator. According to statements to the press collected by the agency Europa Pressthe third vice president and minister for the Ecological Transition, Sara Aagesen, has been emphatic: “At this time there is no plan to eliminate the PVPC.”
Aagesen defends that “current market conditions are not appropriate” to eliminate this rate and advocates maintaining it for both vulnerable consumers and any citizen who wishes to benefit from it. As the minister explainsSpain’s argument against Brussels is that the Spanish PVPC is not a fixed price, but is indexed hour by hour to the wholesale market and linked to the futures markets, providing it with greater stability and complying with previous requests from Europe. For now, the Executive has left the ball in the court of the CNMC, which has commissioned a study to evaluate whether this model could be dispensed with in the future.
The relief of the social bonus. The debate on the suppression of the PVPC has raised alarm bells among the most fragile households. Having contracted the regulated tariff is an essential requirement to receive the social electricity bonus, an aid that reaches more than 1.7 million beneficiaries, according to data from Ministry for the Ecological Transition and the Demographic Challenge (MITECO). However, users can rest assured: the European Commission’s own report expressly cites the Spanish social bonus as a valid and justified measure to protect vulnerable consumers within a structural strategy against energy poverty.
The clash of two visions. We are faced with an obvious clash of rhythms and concepts. On the one hand, the orthodoxy of Brussels, which conceives the PVPC as a temporary anomaly on its path towards a fully liberalized European market. On the other hand, the pragmatism of the Spanish Government, which still perceives this regulated tariff as an essential shield for citizens against energy volatility. Although the beginning of the end of the regulated rate is already part of the European demands, Spain has decided, for now, to maintain it with assisted breathing.
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