The keys to understanding the new electricity tariff

Since 1 June, domestic consumers and small businesses are continually hearing expressions like "off-peak hours" and "new electricity tariff". This is due to the fact that on that date the changes in the electricity tariff promoted by the Government and CNMC came into force to promote more sustainable electricity consumption.

Would you like to know what has changed and how it will affect your electricity bill? Here are the answers to frequently asked questions about the new tariff.  

What are the main changes in the new electricity tariff?

What has changed is the part of the bill corresponding to tolls and charges, that is, what you pay to cover some costs for the electricity system, such as maintenance of the network that transports electricity to homes and businesses.

As a result of this change, all customers with less than 15 kW of contracted power, which are the majority of domestic customers and SMEs, will now have a tariff with discrimination by time band. This means that they will pay a different price depending on the time the electricity is consumed: If it is in the off-peak period (the cheapest), standard period or the peak period (the most expensive).

The second change affects the power you have contracted, which is the maximum power you can demand at a given time and that determines, for example, how many domestic appliances you can use at the same time. With the new tariff it will be possible to contract two different powers, one for the off-peak period and another for the rest of the day.

What are the time bands corresponding to the new tariff?

Since 1 June there are three time bands: Peak hours, when electricity will be significantly more expensive (from 10am to 2pm and from 6pm to 10pm, from Monday to Friday; off-peak hours, the cheapest (from 12 midnight to 8am from Monday to Friday and 24 hours a day on Saturdays, Sundays and national holidays) and the standard hours, which correspond to the rest of the time.

What has changed with regard to what we pay for power?

First and foremost, you now pay less for the power term. Small consumers used to pay 38 euros per kW per year for the contracted power term, while now that price is 30 euros per kW.

Now, there is also the possibility of contracting two different powers: One for the off-peak period and one for the rest of the day. This will enable you to contract more power in the cheapest period and take advantage of those hours to programme consumption such as charging an electric car or heating and hot water systems by accumulation.

Who is most affected by the change?

The change affects all customers, but the impact will depend on when customers consume energy. If a domestic customer already used more electricity in the hours that are now within the off-peak period, the effect on the bill will certainly be positive.

Small businesses, which have less flexibility than a family to adapt their consumption to the cheapest hours, may well see their bills increase.

In the case of customers who concentrate their consumption at peak times for professional or other reasons, it is always advisable for them to review with their retailer what the most appropriate conditions for them would be and to ask for advice on adapting the contracted power to their consumption habits.

What about customers who already had discrimination by time band before?

The previous tariff with time-band discrimination included 14 off-peak hours every day of the year (from 11pm to 1pm in summer and from 10pm to 12 midday in winter). Now, part of this time band is peak or standard so, if consumption is concentrated in those hours, they will pay more on the bill.

There is no doubt that clients who are able to adapt their consumption to the off-peak hours, between 12 midnight and 8am and on weekends, will benefit.

What consumes the most electricity in a home or business?

Domestic appliances account for 55.2% of residential electricity consumption in Spain according to the IDAE (Spanish Institute for Diversification and Energy Saving), so this is one area where action can betaken to control energy expenditure.

First of all, it is important to have efficient or low-consumption domestic appliances. This is defined by energy categories, which have also changed recently. The most efficient is category A (formerly A+++). For example, a highly efficient refrigerator consumes three or four times less than an old refrigerator.

Furthermore, if you bear in mind which appliances consume the most, you can plan to use them in the cheapest hours.