Economy Small truce of light, which will remain at its third highest price in history this Friday
The high prices of gas in international markets and the rising cost of CO2 emission rights are causing the price of electricity in the wholesale markets to reach unusually high levels every day in recent months, not only in Spain, where week after week historical highs are registered, if not in all Europe.
However, and despite the fact that electricity prices in the countries around Spain They are also at values that daily exceed the 130 euros per megawatt hour (MWh), not all consumers notice the oscillations of the wholesale markets in the same way.
Meanwhile in Spain the daily price of electricity paid by customers under the regulated rate or PVPC (almost 11 million consumers) depends on the wholesale market, countries such as Portugal or France set market rates once or twice a year, so Consumers do not suffer from price changes on a daily basis.
Behind this rise in prices are so much the rise in gas prices in international markets that it is getting closer and closer to prices. 70 euros / MWh when a year ago it cost almost five times less, like CO2 emission rights, which are double the price of a year ago.
But although there are differences in the operation of the electricity bill in each country, electricity prices are just as high, causing the megawatt hour to be paid today in Spain at 159.37 euros (same price as in Portugal when sharing market), followed by Italy (156.69 euros), France (139.67 euros) and Germany (133.76 euros), and only behind United Kingdom, where they reach 150.22 pounds (about 176 euros).
On SpainAs usual, this week two new all-time highs were recorded in the wholesale market, leaving the record set at 188.18 euros / MWh last Thursday, and is located on average so far in September in 147.57 euros / MWh, 40 euros above the almost 106 euros / MWh with which the month of August closed, the most expensive in history to date.
PORTUGAL AND FRANCE PRICE IN ADVANCE
In the neighboring country of Portugal, who shares the market with Spain, the records of the price of electricity have not been reflected in the electricity bill of consumers in such an expressive way because the regulated rates are not directly linked to the wholesale market, but are established annually by the Regulatory Entity of Energy Services (ERSE).
Still, the vast majority of customers (85%) are in the free marketTherefore, their rates are set directly by the marketers, and the Government has already ensured that it has tools to deal with this situation, so that the rate increases in 2022 will be “marginal”.
On France, the Energy Regulation Commission, an independent body, sets the rates that EDF (and the other historical operators) have to offer to private customers who are in the regulated market, and which are updated twice a year, on February 1 and August 1.
Wholesale market prices only influence a third of the final bill, since another third is to cover the cost of the networks and a last third is taxes, while alternative operators can make offers at fixed or variable prices.
Furthermore, thanks to the nuclear reactors of EDF that generate 80% of the electricity, the Gallic country offers the cheapest prices in Europe, allowing EDF’s competitors to buy part of its nuclear production at a tariff that is imposed, and which is currently 42 euros / MWh, well below the current market price.
UNITED KINGDOM GOES UP TO 3,000 EUROS / MWH
For its part, in the United Kingdom the price of electricity on the wholesale market reached its peak this week at 2,500.01 pounds per MWh (about 2,930 euros), due to the increase in gas prices, the lack of wind in Ireland and a fire that caused the closure of a high-voltage cable that imports energy from France.
Although in the United Kingdom Each electricity company sets its own electricity rate, since 2019 the British Government limits the electricity bill paid by the 15 million subscribers to variable or predetermined rates – usually the most expensive – according to a maximum that the regulator Ofgem agrees twice per year and represents 40% of the total bill.
Given the current situation, Ofgem announced for October a rise of 139 pounds (about 163 euros) in the rate limit price, an increase that, according to the regulator, customers can avoid contracting a fixed rate or negotiating with their provider.
ITALY PREPARES MEASURES AND GERMANY FOLLOWS AT RCORD LEVELS
On Italy, the electricity bill in the wholesale market, to which 42.7% of domestic customers are subject, is being affected by the high prices of electricity, which so far in September is on average in 143.21 euros / MWh.
The Energy, Networks and Environment Authority of the country (Arera), an independent body that updates the reference economic conditions for customers in the wholesale market on a quarterly basis, has already warned that between July and September families will pay 9.9% more year-on-year for electricity.
Thus, the Italian Government is studying actions to mitigate this impact that would go through the temporary elimination of VAT (currently 10%), a new cut in system charges until December or a more long-term reform that extracts these expenses from the receipt and includes them as income taxes, so that they are progressive taxes.
On Germany, which has the most expensive electricity prices according to Eurostat data for 2020, the setting of the electricity price for final customers (individuals and companies) is the responsibility of the respective supply company, which establishes it independently, and the end customer has freedom of choice regarding his electricity supply company and can change supplier.
In the last twenty years the price per kilowatt hour has doubled for the average consumer, and during the last days records are being reached, with 200.88 euros / MWh reached at auction on September 13.
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