The price of electricity soars this Wednesday to a new record high, with more than 106 euros / MWh


The average price of electricity in the wholesale market will touch this Wednesday a new record high, surpassing the level of 106 euros per megawatt hour (MWh) after increasing by 4.6% compared to Tuesday. Specifically, the ‘pool’ electricity for tomorrow will record an average price of 106.57 euros / MWh, pulverizing the 103.76 euros / MWh that were the all-time record in the market until tomorrow and dating from January 11, 2002, according to OMIE data collected by Europa Press.

Electricity companies are able to offer the most expensive electricity tariffs to 6 out of 10 households.

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Throughout Wednesday, the price of electricity will reach a maximum of 110.64 euros/MWh, while the minimum for the day will be 100.83 euros/MWh. In this way, the price tension in the wholesale electricity market intensifies so far in July, especially this week.

The electricity bill of an average user has increased by 34.6% in the first two weeks of July compared to the same month last year, according to data from Facua-Consumers in Action. According to estimates of the consumer association on the evolution of the semi-regulated tariff (PVPC), if the rates continue like this, the monthly bill would be 84.35 euros, an amount of the bill even higher than in June, when it was 81.27 euros.

Thus, with the rates for the first fifteen days of this month, the average user will pay 21.68 euros more than in July 2020, when the bill stood at 62.67 euros.

Sector sources consulted by Europa Press attribute these maximums to a combination of factors, such as gas prices and CO2 emission rights, which are setting the upward trend in the ‘pool’ in recent months, coupled with the lower contribution of renewables in the ‘mix’.

In addition, the high temperatures this week, which will exceed 40 degrees Celsius in several parts of the country, will lead to an increase in demand – the negotiated energy forecast for this week – and to a higher demand for electricity. Wednesday is 538 gigawatt hours (GWh), compared to 531 GWh on Tuesday.

The price of energy has a close weight in the bill of around 24%, while about 50-55% corresponds to tolls – the cost of transport and distribution networks – and charges – the costs associated with the promotion of renewables, the extrapeninsular and the annuities of the tariff deficit – and the rest taxes.

Fluctuations in the daily price affect consumers on the regulated tariff (PVPC), just over 10 million, while those on the free market – some 17 million – are exempt, as they have an agreed price with their company.

Lower VAT and suspension of 7%.

On 24 June, the Government approved an emergency Royal Decree-Law to reduce the taxes applied to the supply of electricity and, with it, the electricity bill for households, the self-employed, SMEs and companies as a whole, which involves lowering VAT on electricity from 21% to 10% until the end of this year and the suspension of the 7% tax on electricity generation for three months.

In the specific case of VAT, a 10% reduction is applied until the end of the year for all consumers with contracted power up to 10 kilowatts (kW), provided that the average monthly wholesale electricity market price is above 45 euros per megawatt hour (MWh).

With regard to the suspension of the 7% tax on the value of electricity production, which already in 2018 was decided its temporary suspension for six months to contain another upward wave in the price of light, it will be in force during the third quarter of this year.

The association estimates that the lowering of VAT to 10% until December while the average price per megawatt hour is above 45 euros has cushioned the rise by 8.44 euros. If it continued to apply 21%, the bill would have broken all records, reaching 92.79 euros.

If the rates continue like this, July will be the third most expensive bill in history for the average user. To date, the five highest bills have been the 88.66 euros in the first quarter of 2012, 87.81 euros in January 2017, 83.55 euros in September 2018, 82.13 euros in May 2021 and 81.55 euros in February of 2021.

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