Price of electricity today, August 14: the cheapest hour will be at 14:00 and the most expensive at 21:00

The PVPC pricing system in Spain is practically modified through regulatory changes driven by the Government (MITECO), not by a formal law. The basic framework is in the Law 24/2013 of the Electricity Sector, while the specific methodology is mainly set out in Royal Decree 216/2014 and its amendments, and in technical resolutions such as the operation procedure 14.12, updated by the Resolution of June 30, 2023. Changing the system therefore involves approving a new royal decree or another regulatory norm (ministerial order, resolution of the State Secretariat) following the usual process: technical proposal, consultations, CNMC report, Council of State opinion in the case of royal decrees, and final approval by the Council of Ministers and publication in the BOE.

1. Legal framework of the PVPC and competent authority

The legal basis is in article 17 of the Law 24/2013, of December 26, of the Electricity Sector, which:

• Defines the voluntary price for the small consumer as a maximum price applicable by the reference retailers.
• Establishes that the PVPC must additively include production costs, tolls, charges, and marketing costs.
• Provides that the Government “will establish the calculation methodology” of the PVPC and that specific values will be set by ministerial order.

In execution of this authorization, Royal Decree 216/2014 sets the calculation methodology of the PVPC and its contracting regime. It has been amended, among other norms, by Royal Decree 469/2016 and, more recently, by Royal Decree 446/2023 (mentioned in the Resolution of June 30, 2023), which introduces indexing to forward products to reduce volatility.

2. Type of norm used to modify the system

According to this framework, the “pricing system” of the PVPC is articulated at three levels:

• Law: Law 24/2013 sets the general principles (existence of the PVPC, basic components, Government competence).
• Royal decree: Royal Decree 216/2014 and its amendments (such as RD 469/2016) establish the detailed methodology of the PVPC (term structure, formulas, scope, etc.).
• Development norms: ministerial orders on marketing costs (mentioned in RD 216/2014 itself), and system operation procedures such as P.O. 14.12, approved and revised by resolutions of the State Secretariat (for example, the 2015 one and its update in the Resolution of June 30, 2023).

Therefore, to change the pricing methodology (not just parameters), the usual and legally foreseen way is to approve a new royal decree or an amendment to Royal Decree 216/2014, complemented later with ministerial orders and technical resolutions.

3. Formal process to change the PVPC methodology

The typical legal-administrative procedure to modify the PVPC pricing system follows these phases:

3.1. Preparation at the Ministry (MITECO)

• The Directorate General for Energy Policy and Mines prepares a draft royal decree or ministerial order that modifies RD 216/2014 or issues new regulation.
• At this stage, technical proposals from the system operator (Red Eléctrica) are integrated, as explained in the Resolution of June 30, 2023, which indicates that the operator submitted a proposal to modify operation procedure P.O. 14.12 after the prior regulatory change.

3.2. Public consultation and hearing

• For royal decrees and orders with relevant impact, a public consultation and hearing process is opened through the Ministry’s website, where agents and citizens can submit comments (the 2023 resolution explicitly mentions the comments received in this process).

3.3. Mandatory reports

• A report is requested from the CNMC, exercising its supervisory functions and issuing reports on tariff methodologies and regulated prices.
• In the case of RD 469/2016, it is expressly stated that the National Commission of Markets and Competition issued a “Report on the draft royal decree establishing the methodology for calculating the commercial margin of reference retailers to be introduced in the PVPC.”
• For royal decrees, the opinion of the Council of State is also sought.

3.4. Approval and publication

• The final text of the royal decree is submitted to the Council of Ministers, which approves it.
• The norm is published in the BOE (as happened with RD 216/2014 and RD 469/2016) and comes into force on the indicated date.
• In development of that royal decree, the State Secretariat for Energy approves, by resolution, the operation procedures that specify how the PVPC components are estimated and published, such as P.O. 14.12 updated in the Resolution of June 30, 2023.

4. Exceptional use of decree-law or law

Although the ordinary channel is regulations, in situations of extraordinary and urgent need the Government could resort to a royal decree-law, which is a norm with the rank of law approved by the Government and later ratified by Congress (according to the general definition of decree-law included in the background information). The article 17 of Law 24/2013 could also be modified by a legislative reform approving a new law in Parliament, but this is used only if the legal design of the PVPC itself is to be altered, not just its calculation method.

5. In summary

Modifying the PVPC pricing system does not require a new law, but reforming Royal Decree 216/2014 (or approving a new one) and then adjusting ministerial orders and operation procedures such as P.O. 14.12 through resolutions published in the BOE, like the Resolution of June 30, 2023. The process goes through the Ministry for Ecological Transition, public consultation, reports (especially from the CNMC), Council of State opinion in the case of royal decrees, approval by the Council of Ministers, and official publication.

Red Eléctrica de España (REE, now Redeia) is the system operator and the main transporter and manager of the electricity transmission network in Spain, with key functions in real-time operation and network development, but does not set tolls, charges, or other regulated tariffs. These tariffs are normatively determined by the Government and, after the reform of Royal Decree-law 1/2019, by the CNMC, while REE is limited to providing cost information and applying and settling charges according to operation procedures. Below, I clearly differentiate its competencies in system management from those in regulated price setting.

1. Basic regulatory framework

REE’s competencies are mainly regulated in Law 24/2013 of the Electricity Sector. This law defines system subjects (producers, market operator, system operator, transporter, distributors, retailers, etc.) and assigns them specific functions, distinguishing between:

• System operator (art. 30 LSE): a commercial company designated and certified as transmission network manager by the CNMC and the competent Ministry.
• Transporter (art. 36 LSE): company owning the transmission network, which builds, maintains, and operates these facilities.

The Law itself establishes that Red Eléctrica de España, S.A.U. must keep separate accounting for transmission and for operation of the peninsular and non-peninsular system, reflecting the functional separation of its activities.

2. REE’s competencies in system management

2.1. As system operator

According to Law 24/2013, the system operator has, among others, functions to:

• Ensure the safe and continuous operation of the electrical system, dispatching generation with criteria of safety, quality, and minimum overall cost, including integration of renewables and non-peninsular systems.
• Manage international interconnections and short-term energy and balancing service exchanges; balance exchanges are carried out by the system operator or other subjects under regulatory terms.
• Apply and manage the system operation procedures approved by the Ministry or CNMC (payment guarantees, settlements, balancing services, demand response, etc.), included in multiple resolutions, such as procedures 1.1, 3.x, and 14.x (for example, PO 1.1, PO 14.3, or subsequent adaptations approved by the CNMC).

In non-peninsular systems, the Law provides specific economic incentives to the system operator to reduce generation costs while maintaining supply security.

2.2. As transporter and transmission network manager

In its role as transporter, the Law assigns the designated company (REE in practice) functions such as:

• Execute the binding transmission network planning approved by the Government, ensuring its development and expansion at the lowest cost for the system.
• Build, maintain, and operate transmission facilities, always complying with the system operator’s instructions.
• Guarantee non-discrimination among users of the transmission network and facilitate the use of its facilities for energy transit under non-discriminatory conditions.
• Provide necessary information to the Administration and CNMC for establishing its regulated remuneration.

The planning itself is the Government’s competence, with participation of Autonomous Communities and CNMC report, but the system operator must formulate proposals so that the network can meet demand medium and long term at the lowest cost, giving it a relevant technical role in network design.

3. Tolls, charges, and regulated tariffs: role of REE, CNMC, and Government

3.1. Who sets what

Law 24/2013 distinguishes between access tolls to transmission and distribution networks (covering network costs) and charges (other system costs). The competential distribution, reinforced by Royal Decree-law 1/2019, is as follows:

• CNMC: approves the methodology, structure, and values of transmission and distribution tolls through circulars such as Circular 3/2020 and annual toll resolutions (for example, for 2024, 2025, and 2026: tolls 2024, tolls 2025, tolls 2026).
• Government/Ministry: regulates the structure, methodology, and values of system charges and approves the prices of charges and other regulated costs through orders such as Order TED/113/2024.

Additionally, there are historical access toll orders prior to the full involvement of the CNMC (for example, tolls 2016, 2017, 2018, 2019), in which REE’s role was also not decisive but remunerated subject.

3.2. What REE does and does not do regarding tariffs

Regarding tolls, charges, and other regulated tariffs:

• REE is a recipient of remuneration for transmission and system operation: its income is partly financed with regulated tolls, but it has no normative power over their amount.
• It must submit cost information and regulatory data to the CNMC and Ministry (developed, for example, in Circular 1/2015 on regulatory information of transmission and system operation costs).
• Acts as settlement manager in some regulated concepts (balancing services, capacity payments, etc.) following operation procedures 14.x and resolutions such as Rights of collection and payment obligations, but always applying methodologies and values set by CNMC and Government.

No norm in the consulted sources attributes to REE competencies to calculate, politically propose, or set tolls, charges, or voluntary prices for the small consumer beyond its technical role of providing information and executing settlements.

4. Market operation

Law 24/2013 clearly distinguishes between system operator and market operator, which is another commercial company (OMIE) with functions regulated in article 29 and in the rules of operation of the day-ahead and intraday markets approved by resolutions of the State Secretariat for Energy and the CNMC (for example, 2015 rules, their 2018 update [link], and subsequent CNMC resolutions of 2021, 2023, and 2024: 2021 adaptation, 2023 adaptation, 2024 adaptation).

Therefore, REE is not the wholesale market operator, but the system operator and network manager, with technical responsibilities for security, quality, and network planning, but without own competencies to set regulated prices or autonomously design market economic rules.

The Voluntary Price for the Small Consumer (PVPC) is the regulated electricity tariff in Spain and only certain supplies that meet specific legal requirements can opt for it. The basis is in Law 24/2013 of the Electricity Sector and, above all, in Royal Decree 216/2014, which sets who can contract PVPC and under what conditions. To access the social bonus (discount on the PVPC) additional requirements are regulated in Royal Decree 897/2017. Below is a systematic summary of these requirements.

1. Basic regulatory framework

The PVPC is defined in article 17 of Law 24/2013 as the maximum reference price at which certain consumers can contract, instead of going to the free market. That law authorizes the Government to specify:

• Which consumers have the right to PVPC.
• The price calculation methodology.
• The last resort tariffs for vulnerable consumers, calculated from the PVPC.

These aspects are developed in Royal Decree 216/2014, partially amended by later norms but essentially in force for access requirements. Additional protection for vulnerable consumers and the social bonus is regulated in Royal Decree 897/2017, which has itself been adjusted by various royal decree-laws, such as Royal Decree-law 15/2018 (referenced in the normative database) and others.

2. General requirements to opt for PVPC

According to article 3 of Royal Decree 216/2014, holders of supply points who simultaneously meet these conditions can opt for PVPC:

• Type of client: must be natural persons (domestic consumers) or microenterprises that prove that status. The royal decree itself foresees that the National Commission of Markets and Competition may verify that it is indeed a microenterprise.
• Supply voltage: the supply point must be connected at low voltage, that is, voltages not exceeding 1 kV.
• Contracted power: power must be less than or equal to 10 kW in each of the existing time periods. This power threshold can be modified by ministerial order, but the general rule in force in the royal decree is ≤ 10 kW.
• Reference retailer: the contract must be signed with a reference retailer, not with any free market retailer. RD 216/2014 itself configures the obligation of these retailers to attend requests from consumers who meet the requirements.

Article 3.4 of Royal Decree 216/2014 clarifies that a consumer will be considered to be under PVPC when, meeting the above requirements, they have formalized a supply contract with a reference retailer and have not expressly opted for another contracting modality (for example, a fixed annual price offer or another free market product).

3. Specific requirements for vulnerable consumers and social bonus

Besides being able to opt for PVPC, to be considered a vulnerable consumer and access the social bonus additional requirements must be met, regulated by Royal Decree 897/2017 and Law 24/2013 itself:

• Be a natural person, holder of the supply point.
• The supply corresponds to the habitual residence of the holder.
• Have contracted power equal to or less than 10 kW at that supply point (RD 897/2017 itself mentions this limit for applying its measures).
• Be effectively under PVPC (it is a necessary condition to be vulnerable for electrical purposes).
• Also meet certain socioeconomic requirements (article 3 of RD 897/2017), including income limits referenced to the IPREM of 14 payments (for example, household income equal to or less than 1.5 times the IPREM, with increments per number of members), as well as other situations detailed by the norm.

Law 24/2013 foresees that the social bonus covers the difference between the PVPC and a reduced last resort tariff for vulnerable consumers. Royal Decree 897/2017 specifies that the social bonus consists of a discount on the PVPC (for example, the cited text mentions discounts of 35% and 50% for certain categories, applied with energy consumption limits).

4. Basic procedural aspects

Formally, to opt for PVPC the consumer must:

• Request the tariff change to a reference retailer, who is obliged to inform about the possibility of PVPC and, if applicable, the social bonus (articles of Royal Decree 897/2017 on consumer communications).
• Formalize a PVPC supply contract with that retailer, which will have annual duration and automatic renewals unless expressly changed.
• For the social bonus, provide supporting documentation of income and personal circumstances as established by RD 897/2017 and its development regulations.

No further information is available in the consulted sources about specific technical meter requirements other than those implied by the general measurement and billing regime itself.