How to end the abuse of electricity and gas rates | Opinion

The Government and the EU are mulling over how to get their hands on the continuous increase in energy prices. The formation of the prices of these essential products is marked by the dependence on the supplier of the raw materials, by the wholesale pricing system and by how competition has been configured in the retail market. In the first two steps, Spain is tied to the EU, but in the last one, the Government can do a lot with little.

If the Spanish electricity and gas retail market is analyzed, it is easy to conclude that it is a perverse/shameful system. The Government and the National Commission of Competition Markets (CNMC) should take measures to put an end to the current dynamic, made up of customer ignorance, blocked by commercial opacity and unintelligible invoices, and a system of persecution with telephone calls of people who are not who they say they are, do not know what they are talking about and offer non-existent prices. The result is a scheme conducive to fraud and picaresque in which the big companies unashamedly participate.

If the Government and the energy companies, the great beneficiaries, have a real desire to help consumers, the solution is very simple: that the companies are obliged to apply the best rate to the client at all times and put an end to the shell game in which the sector is installed. According to a CNMC survey from December 2020, 74% of electricity customers and 82% of gas customers do not know the difference between having a free or regulated market rate. The difference is not minor, if you are in the free market in gas you pay 160% more than in the regulated one and in electricity it happens the other way around; those with a regulated rate bear a cost up to three times higher than the free one. All this for exactly the same service.

Electricity and gas consumers have the option of contracting the supply with a free market company or a regulated market company and switching whenever they want. Those that operate in the first market are the large companies recognizable by anyone, Iberdrola, Endesa, Naturgy or Repsol. Those of the second, Curenergía, Energía XXI, Gas y Power, and Régsiti, are unknown to anyone and are subsidiaries of the former, respectively. Therefore, we are facing the same dogs, but with a different collar.

To understand the nonsense, it is enough to check that today a Naturgy customer of the Gas Use Rate pays 0.117492 euros/Kwh on the free market for the term of power (for what they consume), discounts included. His neighbor, who is in the regulated market, in Gas & Power (a 100% subsidiary of Naturgy), is paying €0.045201/Kwh. Therefore, the client who is in the free tariff, which sounds much better than the regulated one, where he ends up, pays 160% more per kilowatt.

They are identical services provided by the same business group, one under the official name of RL2 Access Rate (free market) and the other called TUR 2 Last Resort Rate (regulated market), which means that the consumption of these customers is between 5,000 and 15,000 kWh per year. Therefore, these two customers, who we suppose consume 10,000 kWh per year, pay very different prices. The one on the 1st floor, the free market, spends 1,175 euros a year on natural gas, and the one on the 1st floor, the regulated one, 452 euros. Then comes the 21% VAT, which raises the bill for one to 1,422 euros and 547 euros for the other.

As can be seen, the difference is notable and the gas marketing companies and the State gain from it, which with the first has received 247 euros for VAT and with the second it does not reach 95 euros. On the sidelines are the special tax on hydrocarbons and the meter rental, which are the same in all rates, and the fixed term, which does vary, but which have a lower impact. It is easy to conclude that neither the operators nor the State have incentives to remove the customer from the wrong rate.

If we look at the price of electricity, we find the same scandal, but in reverse. The regulated market rate, which is called the Voluntary Price for Small Consumers (PVPC), depends on the daily fluctuation of the price of electricity in the wholesale market. On March 24, the PVPC, which has hourly prices, marked an average cost of €0.32606/Kwh. This same service in the free market is between 0.21 and 0.25 euros/Kwh. In January, tariffs could be found at prices between €0.14 and €0.17/Kwh. Therefore, a consumer who spends 10,000 kWh a year would pay 3,260 euros in a year in the regulated market and 2,100 in the free market, to which VAT would have to be added, which in this case is 10%, since the Government lowered to mitigate the blow that the consumer is bearing.

To add insult to injury, the social bond, aid to vulnerable consumers, is set on the PVPC. In other words, the consumer has to sign up for the worst rate and a discount is applied to it based on their economic and social circumstances. Today almost no one cares.

This is realistic painting, there is not even an expressionist display. The Government would have to do as decades ago with fixed-rate mortgages, and that was more complicated, since there were deeds involved. Then it forced banks to change clients from fixed to variable rates in the face of falling interest rates. It should now force carriers to inform the customer of their actual best offer and apply it automatically. The difference between rates exceeds 2,000 euros a year and that is not seen in the CNMC’s comparators, which are impracticable, if not that they do a test with Carlos San Juan, the icon against the digitization of the elderly.

Aurelius Medel He is a Doctor in Information Sciences. Professor at the Complutense University

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About Alex Marcell

He likes dogs, pizza and popcorn. Already a fanboy of Nintendo and Sony, but today throws anything. He has collaborated on sites and magazines such as GameBlast, Nintendo World, Hero and Portal Pop, but today is dedicated exclusively to Spark Chronicles.

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