Electricity in Spain reaches highest price since the gas price cap came into force

The average bill in July was the third most expensive ever, although measures introduced by the government have saved the situation from being even worse

Clara Alba

Madrid

Tuesday, 23 August 2022, 18:11

Gas, electricity, water and food. Families in Spain are still faced with an avalanche of bills so high that they are already causing people to change their habits. The Bank of Spain says vulnerable households are being hit particularly hard, and many have been forced to give up certain everyday items in order to be able to pay their energy bills.

Measures taken by the government to reduce the cost of the energy crisis have limited the impact of runaway prices in the wholesale market, but have not eradicated the problem completely.

In fact the Consumers and Users Union (OCU) calculates that the average electricity bill, based on a consumption of 3,500 kilowatts per year and 4.6 kw of power, was 115.27 euros in July. This is the third most expensive ever, after March this year (143.03 euros) and December 2021 (119.17 euros). It was also more than 43 euros more expensive than in July last year, when consumers paid an average of 72 euros.

Since then, average electricity bills have only been below 100 euros on four occasions: August, September and November 2021 and May this year, when it was 98.80 euros.

The measures which have been implemented to offset the rising prices include a reduction of IVA (Spain's value added tax) on electricity bills from 21% to 10% and then 5%, a reduction in the Special Tax on Electricity and the suspension of the tax on energy production.

The number of people eligible for grants has been increased and an energy saving plan was introduced two weeks ago which has reduced consumption in the country by 9.5% so far.

Cap on gas price

The government’s star measure, however, was the cap on gas prices which it hoped would reduce bills by between 15% and 20%. So far it has managed to contain energy prices in the wholesale market in Spain compared with Germany or France, but has not yet had much impact on electricity bills.

“It has moderated the price increases rather than a reduction as such, because they have continued to go up,” says the OCU.

So the news is not good. Data from the futures market indicates that August will be a difficult month for households. With gas once again at a record high and a new threat of cuts to supply, the average electricity price rose by 35% to 365.33 MW/h on Tuesday, according to the OMIE operator. This is the highest price since the gas price cap came into force, but without it electricity in Spain would be 476.76 euros per MW/h today.

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