How to understand your electricity tariff

How does the price of the kWh work?

We need to start with a basic fact: electricity cannot be stored. This is why in Spain we have a market called the electricity pool where, on a daily basis, electricity supply and electricity demand meet and prices are established.

The companies that produce electricity bring their energy production for the next day to this pool, distributed by hours. The energy can come from different sources, consisting mainly of the following: nuclear power plants, hydroelectric power plants, renewable energy parks and combined cycles. This information on the supply is matched with the estimated demand for the next day, and the market price or marginal price is established by auction, under the control of the Iberian Energy Market Operator (OMIE).

In this way, the prices per kWh for each hour of the next day are established and these can be consulted on the Red Eléctrica Española website.

Does the price vary or does it remain stable?

An analysis of the offer shows that it can vary because of a great number of factors: a lack of wind means that wind turbines barely produce any energy. And the same goes for demand: It varies according to the time of day, according to whether it is a working day or a holiday and it depends on the season of the year (in winter there is more demand for energy for heating and lighting, since the days are colder and shorter).

As a result of this, both supply and demand fluctuate, causing the price of electricity to vary.

Having said this, you should know that most electricity retailers operate in two types of markets:

Regulated market: also called PVPC (Voluntary Price to the Small Consumer). The contracts linked to this market are subject to hourly variations in the price of electricity.

Deregulated market: In this market the different tariffs offered by the retailers are brought together, discounts may be offered, supplies may be combined, technical services may be offered. We will now talk now about this type of tariff, with a break-down of the issues you need to be aware of to be able to assess your decision to contract a certain tariff.

What is a fixed price and how does it work?

Some electricity retailers offer their customers tariffs with a fixed price, so that they do not need to always be aware of the variations in the price of electricity and adapt their behaviour day by day to these fluctuations in the price.

A fixed tariff offers customers a fixed price per kWh, regardless of when it is consumed. In other words, the price is the same 24 hours a day, every day of the year. So if you contract this tariff you will not have to worry if you need to turn up the heating in winter and the price of electricity increases. And you will not need to wake up at 5 in the morning to put the washing machine on because the price per kWh is cheaper during the early morning. No matter what time, day of the week or month you consume energy, it will always cost you the same, since the amount you pay on your bill will only depend on the tariff contracted and your consumption. Even though prices are always subject to review by law, the truth is that this commitment to maintain the price is undoubtedly an advantage for customers, who will always know in advance how much they will pay.

If what you want is not to worry and live at your own pace, Endesa offers you a One Luz tariff with a fixed price per kWh. If you are interested in managing all your energy with a single tariff, we offer you a flat-rate tariff for electricity and gas, Endesa Única.

What are the consumption time bands?

There are electricity tariffs that offer several time bands throughout the day where the price per kWh varies. In other words, there are times of day where consumption is cheaper than at other times. What is the advantage? You can choose the tariff that best suits your way of life, concentrating electricity consumption in those hours where the price is cheaper.

Endesa offers you a One Luz 3 Time Bands Tariff that divides the day into 3 time bands:

• Off-Peak Hours: these are the cheapest hours and go from 12 midnight to 8am on weekdays, and 24 hours a day on Saturdays, Sundays and national public holidays.

• Standard Hours: these are moderately priced hours and go from 8am to 10am and from 2pm to 6pm.
• Peak-Hours: these are the most expensive and this is when it is best to avoid consuming a lot of electricity. They go from 10am to 2pm and from 6pm to 10pm.
  

If you are able to organise yourself and want to save on your bill, we offer you the Tempo Happy tariffs:

• With the Tempo Happy 2 hours tariff you choose the 2 hours that are free.
• With the Tempo Happy Day tariff you choose the day that is free.

Does the tariff have a minimum duration?

Another issue to be taken into account when contracting a new electricity tariff is whether there is a minimum duration. There are tariffs that require the customer to stay, not only with the same retailer, but with the same tariff for a certain period of time. If this requirement is not met, the client will have to pay an economic penalty.

Therefore, what seem to be very attractive tariffs because they off, for example, a lower price per kWh compared to other offers, cease to be so if you take the minimum duration requirement into account: If in the near future the price of energy falls and better offers become available, you will not be able to cancel the tariff and switch to a new, more competitive one.

Endesa's electricity tariffs have no minimum duration, so there is no problem if you decide to switch tariffs.

Are servicing and repairs included in the tariff?

There are tariffs that include a number of services related to the supply of electricity, such as servicing and repairs. In this case, you need to assess the coverage of this service:

• If the service is for 24 hours a day, 365 days a year, we would be able to assist you with any incident.
• If you have emergency service, breakdowns would be resolved quickly. In this case, it is advisable for you to be aware of response times and the resolution of claims.
• Whether the service involves any type of payment for providing the service or for cancelling.
• What coverage includes (electricity, windows, plumbing, locksmith), as well as technical details.
• Whether there is a limited number of repairs per year.
• Whether it includes repairs to domestic appliances and heaters, as well as hours taken on small electrical jobs like the installation of lamps, repair of plugs, etc.
• Whether the service includes other types of assistance, such as legal.

How do contracting and procedures work?

If you want to contract a new electricity tariff, there are a number of circumstances:

A) If your property is already registered, but you want to change companies

If you want to change from one retailer to another, you have make the request to the new company, and they will take care of the procedures. You can do it in person in an office, but also by phone or on the internet.

The following documents and data will be required:

• First name and surname(s) of the contract holder.
• ID card or identify document for the contract holder.
• Contact details (telephone, e-mail, postal address).
• Address of the property in the contract.
• Bank account number so bills can be paid by direct debit.
• CUPS (Universal Supply Point Code): this is a unique alphanumeric identifier for the supply point of the property.

B) It is the first time you are contracting electricity for your property

In this case, in addition to the above documentation, you need to provide the Electrical Installation Certificate or CIE, also known as the electrical bulletin.

C) Your property is registered, but you would like to change the tariff within the same company

All you need to do is contact your retailer and make a request to change to a new tariff.