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Electricity bills in June look like they will be the dearest ever

The average electricity bill has shot up 45.4 per cent in the first half of June.
The average electricity bill has shot up 45.4 per cent in the first half of June. / SUR
  • The cost of producing power in Spain continues to go through the roof, while the effect of the new time bands on prices means consumers are getting hit twice this month

There is no end in sight this week to the record rises in electricity prices in Spain. Every day that passes the market sets new highs for the year so far; only a one-off surge due to the bad weather of Storm Filomena on 8 January saw higher daily costs so far in 2021.

On Wednesday (16 June), the average price of generating power is expected to touch those January levels again; 95 euros per megawatt / hour (Mwh). It is expected to hit a maximum of 105.5 euros / MWh between 9.00pm and 10.00pm and a minimum of 82.5 euros / MWh from 4.00pm to 5.00pm. This would mean an average rise of four per cent in just 24 hours form Tuesday.

Households have been feeling the pinch more and more since the start of June. The average electricity bill has shot up 45.4 per cent in the first half of June (based on Wednesday’s data). If the prices so far in the first fortnight of June stay that way for the rest of the month, the average user's monthly bill will have seen an increase of 27.50 euros compared to a year ago and sit at 88.11 euros (including tax). June could end with the second most expensive bill ever, after the 88.66 euros a month from the first quarter of 2012.

On Tuesday, the daily electricity market in Spain registered prices almost 28 per cent higher than those of France, Germany or Italy, according to officially data.

The surge is due to an increase in natural gas prices and CO2 offsetting costs, which so far in June exceed 51 euros per tonnes, double the value of a year ago. All of this, together with a lower contribution from cheaper, renewable energy – such as wind and solar power, and nuclear power – with some plants shut down for maintenance. There is also normal seasonal increase in demand due to high temperatures adding to the upward spiral in prices that does not seem to be showing signs of slowing down.

The actual cost of generating energy, which has risen so much, is only about 24 per cent of the total electricty bill. The rest of what a consumer pays includes fees for the distribution networks, levies for promoting the use of renewable energy and other charges, as well as IVA tax of course.

The daily changes in the cost of generating power affect mostly those on the variable, regulated price, known as the PVPC; there are about 10 million consumers paying that way. Some 17 million billpayers are not affected as they have free market tariffs or fixed plans with their energy supplier.

However, both types of consumers are being affected by the new time bands for energy prices, brought in by the government on 1 June. The three different bands - peak, intermediary and low - affect all the bill, not just the part for the cost of producing the power.

In the case of the PVPC tariffs and other rates linked to the fluctuating market prices, the changes with the new bands are automatically reflected in the bills. In the case of fixed price deals, an energy supplier is obliged to explain to its customers how it will incorporate the new costs by time bands into its monthly charging.

When bills start arriving at the end of the month, households are going to have to study them carefully to understand how the prices have changed and how much power they have used at different times of day.