Megawatt hours and their smaller offspring

As I shaved I was listening to the radio, to the part they call a tertulia, that's the bit where pundits, usually journalists, talk about the latest news. They were talking about inflation and about electric prices. They had some boffin who knew all about the electric market. One little tidbit he dropped in at the end of his section was that every Spanish electric bill has a QR code which leads to a webpage maintained by some sort of Government quango, the "National Energy Commission". By using that code/website, you get a direct comparison between your last bill and the market in general. 

To explain it all properly would take pages and pages. It's quite complicated stuff, so I've kept this as short as my ponderous writing style will allow.

The Spanish electric market has two sorts of contracts for we household users. One is in the controlled market. The other is in the free market.

The controlled price varies from hour to hour. It's an almost incomprehensible pricing system; I certainly don't understand it. It's to do with supply and demand and with an auction between the big energy providers to decide on the price. There are only eight companies that offer contracts in the controlled Spanish market, they are the "Suppliers of Reference", and they are able to do so because they conform with certain government criteria. If you listen to the Spanish news and they tell you that today was the most expensive/least expensive day ever for electric prices, they are talking about this controlled price. If you buy a contract that uses the controlled price, you can never be sure whether your bill will be higher or lower even if you were to use the same amount of electricity under the same conditions.

Most people have a contract in the free market. "Anyone" can set up to sell electricity on to consumers in the free market. I presume it's more or less like that of any other business. If you're a supermarket, you buy your raw material, tomatoes say, from a producer, or their agent, at one price and sell them on to customers at a higher price. Normal capitalist economy stuff. Most supermarkets have tomatoes, the price varies from supermarket to supermarket and how they attract customers to buy them is up to each supplier. So with electricity, it's just the same. The companies that offer contracts to household users buy their electric off someone who generates it or from some intermediary, and then try to attract customers. How they package it up is how they sell their product. Most of the free market contracts have a fixed price for electric under certain conditions and for certain periods.

Electric bills in Spain have several elements. 

There's the power that you contract, the "potencia" - it's the thing measured in kilowatts. We have 3.54 kW. The more potencia you decide you need, the more you will pay each month. Often the cost of the potencia is lower at night and at weekends and more during the working day. 

Then there's the quantity of power that you use. The more power you use, the more you pay. That's why your partner/parent or children are always nagging you not to leave things on standby, to turn off lights, to raise the temperature on your fridge freezer, to buy a pressure cooker etc. etc. 

On top of this part of the bill, you pay a tiny, miserly, insignificant amount to the electric company to subsidise the bono social, which is the discounted price that is offered to people who might otherwise have problems paying their electric bill. Of course, you could see it as a subsidy to the electric companies, but let's keep clear of politics on subsidies and charity for the moment. 

The first subtotal on your electricity bill is made up of these three elements: power capacity, power used and the contribution to the bono social plus an electricity tax. I think this tax is to pay off a debt when the government subsidised the price of electric. I may be wrong. Maggie tells me I usually am.

The second part of your bill is made up of the "extras," which include renting the meter and things you may decide you need or not. One of the things we had on our free market, Iberdrola, bill was a sort of insurance against faults in the house wiring and for repair or replacement of certain white goods should they go phut. I'm sure that other suppliers have other extras.

Finally the subtotal for the energy/bono social/electricity tax is added to the subtotal for the extras and the whole lot then has IVA/VAT added to give us the total we will have to pay.

There have been lots of changes in the way that electricity is sold in Spain over the years. I don't think we had a choice of suppliers when we bought the house and if there was a choice of contracts I was unaware of that option. The company we contracted with was called Iberdrola and they simply renewed the contract each year. We were on the controlled price by default. When Putin started pounding the Ukraine the electricity price in the controlled market went crackers. Every day seemed to be a record high for the price of electric. We certainly noticed it in our bills. By now we were well aware that we had options and we asked Iberdrola what they could offer. I'd noticed, but not known why, the Iberdrola bill had, seamlessly and silently, transmuted into a Curenergia bill. Iberdrola sells in the free market while Curenergia is one of the Suppliers of Reference, selling in the controlled market. When Putin forced us onto the free market, we had to change suppliers to Iberdrola proper.

All of the free market contracts offer different pluses and minuses. The different contracts might offer electric at a fixed price every minute of the day or expensive electricity during certain hours balanced out by lower prices at other times. They may offer a fixed unit price over several years. Lots of them offer green electric though I wonder how anyone can determine where the electrons moving along the cables came from and as Spain seems to consider nuclear power to be as green as solar panels, wind turbines and hydroelectric there may be different ideas about definitions. There are often side offers; buy electric off Repsol, and they'll give you a discount at their petrol stations buy from someone else and they'll give you money off at the supermarket. 

So, back to where this blog started. Prompted by the radio tertulia I looked at the QR code which referenced lots of providers. From that I looked at some providers online, I talked to a couple of advisors one online and one face to face - both tried to sell me a contract with the same supplier. That supplier was not one of the ones that the National Energy Commission suggested as the best value. Amazingly, as if by magic, my Instagram and Facebook feeds also started to fill with adverts for energy suppliers - they must have some sort of sixth sense. It became obvious that changing from one contract to another was dead easy, and so I did.

Whether the decision was a good one or not, time will tell.