Voluntary price for the small consumer (PVPC)

Voluntary price for the small consumer (PVPC)

As of 1 January 2024, a new methodology will be applied for calculating the ‘Voluntary Price for the Small Consumer (PVPC)’, which affects the cost of energy associated with the regulated tariff detailed on the electricity bill.

In accordance with that set out in Royal Decree 216/2014, of 28 March, which establishes the methodology for calculating voluntary prices for the small consumer of electrical energy and the legal framework for contracting the PVPC scheme, Red Eléctrica publishes every day, at 8.15 p.m., the hourly electricity tariffs that will be applied the following day. Said information can be found on the eSios (System Operator Information System) website or via the redOS app for mobile devices.

The hourly price curve is the result of adding the cost of energy production, the payments for transmission and distribution tolls and the charges for the energy consumed.

As of 1 January 2024, in alignment with Royal Decree 446/2023 of 13 June, a new methodology for calculating the Voluntary Price for the Small Consumer (PVPC) is established in order to index it to forward energy market prices and reduce its volatility.

The production cost is made up of the hourly price resulting from the day-ahead energy market, operated by the Iberian Electricity Market Operator (OMIE), and an adjustment cost indexed to the prices of the energy futures markets (effective January 1, 2024). Additionally, prices also take into account the cost of the ancillary services managed by Red Eléctrica in its capacity as system operator, in addition to other costs considered under the current legislation.

The PVPC, in the so-called 2.0 TD tariff, in force since 1 June 2021 replaces the three tariffs that existed until 31 May 2021 with a single tariff based on hourly discrimination and divided into different consumption periods throughout the day. The tolls and charges applied to the electricity bill vary according to the consumption period as follows:

  • The peak period, when such regulated tolls and charges will be higher.
  • The flat period, when the regulated costs have an intermediate impact.
  • The valley period, when such tolls and charges will be lower.

The regulated costs associated with the new periods are applied to the energy consumed and contracted power capacity of the electricity bill of consumers signed up to the PVPC scheme nationwide, although in the case of the autonomous cities of Ceuta and Melilla, the applicable consumption time bands are displaced slightly.

distribution of the time bands

Furthermore, the PVPC 2.0 TD invoicing scheme allows consumers to choose two different contracted power capacity periods depending on their consumption: one will be applied in the valley period and the other in the peak and flat periods.

Does the new regulation affect all electricity consumers?

No. It directly affects all those consumers signed up to the Voluntary Price for the Small Consumer (PVPC) scheme.

At present, it is estimated that there are around 29 million domestic consumers in Spain (94% of all electricity supply contracts), of which around 11 million are subscribed to the PVPC scheme.

How can I find out if I am included under the PVPC scheme? How can I sign up for the PVPC scheme?

On your electricity bill, in the part that refers to 'Contract details', the type of contract should indicate PVPC if you are subscribed to this type of contract. If it does not appear, you are not covered by this type of tariff, but you can contract it through one of the regulated market reference retailers listed by the National Markets and Competition Commission (CNMC).

If I have a PVPC tariff, what should my electricity bill look like?

If you are subscribed to the PVPC 2.0 TD scheme, the bill should include the following data:

  • A fixed energy cost, corresponding to the contracted power, i.e., the maximum amount of instantaneous consumption that is available to a user. This is also known as contracted power billing and includes a penalty factor if the power demanded exceeds the contracted power in any hourly period. This concept is always the same and is applied in the same way, whether you consume electricity or not.
  • Additionally, a variable part or section that reflects the total cost of the electricity consumed based on the hourly price of the PVPC 2.0 TD (energy consumed billing), which is measured, in most cases, through smart meters. The amount will depend on when and how much is consumed.
  • And lastly, the corresponding taxes.

Can I contract different power-capacity levels?

Yes. The current regulation allows consumers to contract up to two different power-capacity levels with their retail electricity supplier, one for the valley period and another for the peak and flat periods.

How is the PVPC price established for each hour of the day?

This price is based on the result of the day-ahead energy market, operated by the Iberian Electricity Market Operator (OMIE), where, on the one hand, the sales bids of the generators for each hour of the day and, on the other hand, the purchase bids of the market retailers concur.

As of January 2024, under the provisions of Royal Decree 446/2023, an additional energy adjustment cost obtained according to the calculation formula in force in the aforementioned Royal Decree is also included.

Through this energy adjustment cost, the determination of the cost of energy is no longer configured exclusively on the basis of the day-ahead market prices and intraday sessions but also takes into account forward energy market prices.

The main component of the PVPC is therefore determined by the price resulting from the matching of OMIE for each hour of the day (known as the pool price) plus an energy adjustment cost in which the price of the energy futures markets will be taken into account and whose weight on the final price will increase progressively until 2026.

The cost of ancillary services is factored into this main component, as well as the payments for tolls, charges and other regulated costs whose impact will vary depending on the time period in which consumption takes place (peak, flat or valley).

The PVPC price curve published by Red Eléctrica through the eSios website and its redOS app breaks down the different price components for each hour of the day.

Why does Red Eléctrica de España provide this information if it does not set the prices?

Among the tasks entrusted to Red Eléctrica de España according to current regulations, is the calculation and daily publication of the hourly prices for energy consumed applicable to consumers covered by the PVPC scheme, as detailed in Royal Decree 216/2014, of 28 March, which sets out the methodology for calculating voluntary prices for the small consumer of electrical energy and the legal framework for contracting the PVPC scheme, so that they can be consulted by any citizen.

In this way, from an independent and neutral position, Red Eléctrica provides information with absolute transparency and makes a tool available to citizens that will help them to manage their electricity consumption more efficiently.

Voluntary price for the small consumer

Red Eléctrica publishes through its website the hourly pricing schedules of ‘energy used’.