The PVPC regulated tariff (or Voluntary Price for the Small Consumer) is a system to determine the price of electricity it was implemented by the Government for all customers in the regulated electricity market. Its most singular feature is the way in which the price for electricity production is calculated.
With the PVPC tariff, just as for the deregulated market, the electricity bill still has three main components:
- The price for producing electricity: this essentially affects the consumption term and is what differentiates between the two markets.
- Access tariffs: these are established by the Government to cover what it costs to transport energy from the plants to your home and other costs associated with maintaining the electricity grid
- Taxes: special tax on electricity (IEE in Spanish) and VAT.
What does the PVPC Tariff consist of?
This is a tariff with variable prices according to time bands. In other words, the price of per kWh of electricity changes for every hour of each day. This means that the price is subject to the volatility of the electricity market, depending on the supply and demand between the energy generating companies and the retailers that sell that energy to the consumer.
This means there are advantages and but there are also disadvantages because electricity is more expensive in winter and in summer when there is more consumption for heating and air-conditioning. But in summer and autumn, when demand falls, electricity is much cheaper. Upward and downward trends also have an impact on prices, for example, fluctuating prices for raw materials such as natural gas and oil.
Time bands on the PVPC regulated market
In the PVPC Tariff, there are 2 time bands for contracted power and 3 time bands for energy consumption:
The off-peak hours are the cheapest time band for electricity and correspond to the hours between midnight and 8am, as well as 24 hours-a-day at weekends and on national public holidays.
The peak hours correspond to the times of the day when we will pay more for electricity consumption, these hours correspond to the time band from Monday to Friday between 10am and 2pm and between 6pm and 10pm.
In addition to off-peak hours and peak hours, there is also a third time band:
These are the standard hours and this is the time band when electricity is moderately priced and correspond to the time band between 8am and 10am, between 2pm and 6pm and between 10pm and midnight, from Monday to Friday.
How are prices calculated and applied in the PVPC regulated tariff?
The PVPC regulated tariff has a price per kWh that changes every hour of each day depending on supply and demand. This means that invoices will never be the same and it is impossible to know what the price will be in advance.
These prices are calculated by the Red Eléctrica de España (REE) and are applied based on the following:
- Hourly energy prices on the market.
- In accordance with the profile for an average consumer.
Prices are published daily on the Red Eléctrica Española website.
To apply these fluctuating prices to your bill, there are two options depending on your circumstances:
1. If you already have a smart meter
It is possible to know how many kWh you consume each hour of each day by telematic means. In this case, you simply have to apply the prices that are communicated by Red Eléctrica Española.
2. If you do not yet have a smart meter
There are now very few cases where supply points do not yet have a smart meter. However, in these cases it is impossible to know how many kWh you consume each hour, so the profile for an average consumer is applied (this is created by Red Eléctrica Española).