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Malaga
Wednesday, 18 December 2024, 17:44
There is bad news on the horizon for financially-stretched households in Spain. The average consumer's electricity bill for the year could go up by almost 120 euros in 2025, according to the Organización de Consumidores y Usuarios (OCU), the country's leading, independent consumer group. The organisation estimates that the imminent IVA Spanish sales tax increase and regulatory changes announced by central government "will make the electricity bill for an average household (with a contract of 4.6 kW supply and 3,500 kWh of consumption per year) 13% more expensive, which will mean paying 118 euros more if they have a free market tariff and 106 euros more if they have a regulated PVPC tariff."
According to the OCU, "although the Spain's CNMC competition watchdog has announced a reduction in the charges passed on to consumers for supplying electricity to their homes, it will barely cut the bill by 1 euro per year for the average household." A reduction "that is far from compensating for the increase in three other items, such as system charges, the financing of the social bonus and, especially, the increase in IVA on electricity."
Regarding system charges, the Ministry for Ecological Transition's proposal is for " a sharp linear increase of 33% in all items. The result for the average household is that their bill will increase by 22.30 euros. Even so, they are still far below those initially proposed in June 2021, before the war in Ukraine turned the electricity market upside down", said the consumer watchdog.
According to the OCU, the cost of financing the social bonus is also going to increase, "which will have an impact on the bills of other consumers who have a free market tariff." This concept, which almost all electricity suppliers pass on to the customer as another item in the tariff, "will go from 0.1915 euros to 0.3168 euros per month, which means a small increase of 1.50 euros per year. This does not apply to consumers with a regulated PVPC tariff: from 1 January they will be on a par with the rest, which will mean a saving of 8.60 euros a year, as they were paying more to cover the cost that the main providers had to assume for several months without being able to pass on that cost to their customers."
However, the main cause of the rise, according to the OCU, will be the end of the transitional measure of applying a reduced IVA tax rate of 10% when the wholesale market price was set at more than 45 euros/MWh during the previous month. "It therefore returns to the value of 21% that, except for specific exceptions, had not been applied since the war in Ukraine when it began to be lowered in order to alleviate price rises as a result of the uncertainty generated."
The end result of these changes will be that the monthly bill for an average household on the regulated PVPC tariff (calculated with its November price) will go from 74.60 to 83.60 euros per month, or 106 euros more per year, according to the OCU. Meanwhile, for the rest of the free market consumers, the increase "will be slightly higher (13.4%), reaching 118 euros per year."
The OCU regards electricity as a basic necessity and, as such, "a reduced IVA rate of 10% maximum should be applied permanently and regardless of the price of energy." This is a recurring request from this consumer watchdog and one of the most important demands of the campaign for the improvement of the electricity market that the OCU launched in 2021 and which it will maintain until proper notice is taken of it.
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