Spain reforms electricity rates, aimed at reducing volatility in prices

The Spanish government has reformed the regulated electricity rates to reduce the volatility in prices.

From January 2024, long-term estimated trends will also be taken into account to set prices. It's expected that this will avoid sudden large changes in prices for consumers.

The regulated rate is currently completely dynamic, changing hourly. 

Sources from the ministry of ecological transition point out that the reform is aimed at limiting the effects that scenarios of runaway price peaks can have on consumers' bills, such as those generated by the war in Ukraine.

However, beyond limiting this kind of sudden impact, it is not specified what the effects may be while offering stability, if it will involve increases or decreases in price.

When the new rates come into force, 25% of the final price will be determined by future market estimates, while this will increase to 40% in 2025 and then 55% from 2026. 

Spanish government sources justified the decision in the expectation that price volatility, such as that seen when the war in Ukraine broke out, will become an increasingly common phenomenon.

With the reform, it is specified that only households and small businesses will be accommodated. In Spain, there are around nine million consumers covered by the regulated rate, around 34% of households.