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The hourly price of the PVPC is formed from the actual cost of energy in the wholesale market plus a series of regulated components (tariffs, charges, commercialization costs, system adjustments, etc.). The basic methodology is in the Royal Decree 216/2014, developed based on article 17 of the Electricity Sector Law 24/2013 and updated by subsequent regulations. The system operator (Red Eléctrica) calculates and publishes each afternoon the hourly components of the PVPC, using as reference the matched prices by OMIE in the day-ahead and intraday markets, according to procedure P.O. 14.12 approved by the Resolution of June 30, 2023, of the Secretary of State for Energy (resolution of 30.06.2023). From these data, the reference retailers apply tariffs, charges, and other regulated concepts set by the Government and the CNMC, obtaining the final price billed to the consumer.

Regulatory framework and general scheme

Article 17 of the Law 24/2013 defines the PVPC as a maximum price that reference retailers can charge, formed by:

• Production cost of electricity, determined “according to market mechanisms.”
• Access tariffs to transport and distribution networks.
• System charges (energy policy costs, deficit, etc.).
• Commercialization costs recognized by regulation.

The Royal Decree 216/2014 specifies how each component is calculated, how it is transferred to the bill, and which entities are involved. This scheme has been adjusted (for example, with Royal Decree 148/2021 on charges and orders such as Order TED/1484/2021 on charge prices), but the basic logic remains in force.

Formation of the hourly energy cost

The key term is the hourly energy cost term (TCUh), calculated for each hour h:

• It starts from an hourly average price Pmh, which combines the result of the day-ahead market and the first session of the intraday market (matched by the market operator OMIE).
• System adjustment services SAh are added, which according to P.O. 14.12 are broken down into:
  • PMASh: hourly price of adjustment services (technical restrictions, reserves, other non-frequency services...).
  • CDSVh: cost of hourly deviations per MWh consumed by reference retailers.
• Other supply-associated costs (OCh) are added, which include, among others, components linked to renewables and other regulated services, according to the P.O. 14.12 resolution and regulations such as Royal Decree 960/2020.

Red Eléctrica, as system operator, publishes before 20:15 each day the values necessary to calculate the PVPC for the 24 hours of the following day, in accordance with section 4 of P.O. 14.12 (resolution of 30.06.2023).

Transfer of the hourly cost to the bill

According to Royal Decree 216/2014, the PVPC bill is composed of:

• Power term: sum of:
  • Power of transport and distribution tariffs.
  • Power of system charges.
  • A fixed term of commercialization costs (CCF) per kW per year, set by ministerial order.
• Active energy term:
  • For meters with remote reading: the energy actually consumed each hour (Eph) is multiplied by the hourly TCUh (which already includes Pmh, SAh, and OCh), and energy tariffs and charges are added.
  • For points without hourly measurement: adjusted consumption profiles are used. Red Eléctrica calculates hourly profile coefficients weekly and publishes them, as provided by the royal decree, and with them the consumption of the billed period is distributed among hours to apply the TCUh.
• Social bonus financing term (FBS), according to article 14 bis of Royal Decree 897/2017 and regulations such as Royal Decree 968/2014 on the distribution of the social bonus.
• If applicable, reactive energy, according to CNMC Circular 3/2020, expressly cited in Royal Decree 216/2014.

Taxes (VAT, electricity tax, etc.) are then applied to the result of these terms, which the regulation itself excludes from the strict definition of PVPC but determine the final amount to be paid.

Organizations involved and division of functions

• Ministry for the Ecological Transition and the Demographic Challenge / Secretary of State for Energy: designs the general methodology (Royal Decree 216/2014), sets charges and other regulated costs through royal decrees and orders (for example, Royal Decree 148/2021 and Order TED/1484/2021) and approves operating procedures such as P.O. 14.12 (resolution of 30.06.2023).
• Red Eléctrica de España (REE), as system operator: calculates the hourly components of the PVPC (Pmh, SAh, OCh, hourly profiles, etc.) and publishes them for billing use, according to Royal Decree 216/2014 and P.O. 14.12.
• OMIE, market operator: manages the day-ahead and intraday markets and publishes the resulting prices that serve as the basis for Pmh.
• CNMC: approves the methodology of transport and distribution tariffs (Circular 3/2020) and various operating procedures and market rules; also supervises the functioning of the market and retailers, as established by Law 3/2013 and reflected in several resolutions published in the BOE.
• Reference retailers: apply the resulting prices, add regulated commercialization costs, and issue the bill to the consumer, according to the legal regime of Royal Decree 216/2014.

A consumer can subscribe to the regulated electricity tariff, the Voluntary Price for the Small Consumer (PVPC), if they mainly meet three types of requirements: technical supply type (low voltage and reduced power), subjective type (being a natural person or microenterprise), and commercialization type (contracting with a reference retailer). To access the social bonus, it is also mandatory to already be on PVPC and meet additional income and vulnerability conditions. There is no general regulatory requirement to have a remotely managed meter to subscribe to the PVPC, although it does influence how consumption is billed.

Technical requirements of the supply point

According to article 5 of Royal Decree 216/2014, of March 28, on voluntary prices for the small consumer, the following may subscribe to PVPC:

• Low voltage supplies: supply points made at voltages not exceeding 1 kV.
• Power limit: with contracted power less than or equal to 10 kW in each of the existing time periods.

This 10 kW threshold can be modified by ministerial order, but in the current wording it remains at 10 kW. These criteria delimit the notion of “small consumer” for PVPC purposes.

Who can be a PVPC subscriber

The same provision establishes that the following may subscribe:

• Natural persons who are holders of the supply point.
• Microenterprises, in the sense of Regulation (EU) 651/2014, of June 17, 2014 (i.e., very small companies in terms of staff and turnover).

Therefore, SMEs that are not microenterprises and larger companies cannot subscribe to PVPC; they must go to the free market.

Obligation to contract with a reference retailer

PVPC cannot be offered by any free market retailer; only reference retailers designated according to Royal Decree 216/2014. The text itself indicates that reference retailers must attend requests from:

• Consumers who, meeting the requirements of article 5 (low voltage and ≤10 kW), opt for PVPC.
• Vulnerable consumers and those who, without the right to PVPC, temporarily lack a contract in the free market.

Royal Decree 897/2017, of October 6, adds that when a consumer in the free market meets the requirements to subscribe to PVPC, their retailer must inform them that only a reference retailer can apply PVPC and, if applicable, the social bonus, and that the change will be made without penalty as long as the network access parameters are not modified.

Relationship between PVPC and social bonus

Royal Decree 897/2017 regulates the vulnerable consumer and the social bonus. In summary:

• To be a vulnerable consumer, it is essential that the natural person is the holder of a supply point in their main residence, with contracted power equal to or less than 10 kW, and that they are subscribed to PVPC, in addition to meeting certain income thresholds or other conditions (large families, pensioners with minimum pension, beneficiaries of the Minimum Vital Income, etc.).
• Therefore, PVPC is the mandatory gateway to be able to request the social bonus.

Remotely managed meter and billing

Royal Decree 216/2014 foresees that billing with PVPC is done:

• Based on consumption profiles when there is no meter with remote reading and management integrated into the systems.
• Based on actual hourly consumption values when the supply has a measurement device with remote reading and management effectively integrated.

The remotely managed meter is not configured as a requirement to subscribe to PVPC, but as an element that improves billing accuracy.

Main regulatory references

The above requirements are included in the Electricity Sector Law and, above all, in the regulatory development. Among others, the following provisions can be consulted in the Official State Gazette:

• Royal Decree 216/2014 (PVPC)
• Royal Decree 897/2017 (vulnerable consumer and social bonus)
• Order ETU/943/2017
• Royal Decree 184/2022
• Resolution 30/06/2023 (PO 14.12 PVPC)
• Royal Decree 148/2021
• Resolution 28/04/2021 (bill model)
• Royal Decree-law 15/2018
• Royal Decree-law 23/2021
• Royal Decree-law 17/2021
• Royal Decree-law 10/2022
• Order TEC/1366/2018
• Resolution 7/11/2019 (PO 14.8)
• Supreme Court ruling 12/14/2018 (PVPC)
• Supreme Court ruling 12/28/2018 (PVPC)
• Royal Decree 469/2016
• Supreme Court ruling 11/3/2015
• Resolution 6/08/2015 (PO 14.12)
• Supreme Court ruling 3/28/2022 (RD 897/2017)
• Supreme Court ruling 3/10/2022
• Supreme Court ruling 2/22/2022
• Order TED/133/2026
• Order TED/197/2025
• Resolution 3/06/2024 (CNMC)

In the Spanish electricity system, the regulated PVPC tariff and free market offers differ mainly in how the electricity price is set, who controls it, and what risks the consumer assumes. The PVPC is a price set according to rules established by the Government and directly linked to the wholesale market; free market offers are prices agreed between retailer and customer, with more room for promotions, added services, and contractual clauses. For an average household, PVPC tends to be more volatile and transparent, while the free market offers greater bill stability but requires careful comparison to avoid overpaying. The choice has direct economic implications for families and is closely linked to regulatory design and energy policy.

What is the regulated PVPC tariff

The PVPC (Voluntary Price for the Small Consumer) is the regulated electricity tariff designed for domestic consumers and small supply points with reduced contracted power. It can only be offered by a limited number of companies called reference retailers, designated and regulated by the State.

Its main features, from a regulatory point of view, are:

• Price formation: the energy term is very directly based on the price of the wholesale electricity market. The hourly cost of the “pool” is transferred to the bill, following a methodology established by regulation.
• Public intervention: the Government sets the calculation rules, access tariffs, charges, and other regulated components, as well as the general service conditions.
• Variability: the price varies hourly and, generally, from one day to the next. The consumer assumes the volatility of the wholesale market, with cheap months and expensive ones.
• Social protection: certain social policy figures, such as the electric social bonus, are linked to holding a PVPC contract with a reference retailer.

What are free market offers

In the free market, any duly authorized retailer can design its own electricity and gas offers within the general framework of consumer protection regulations and electricity regulation. The price is not determined directly by the official PVPC formula, but by the company's commercial decision.

General characteristics:

• Price formation: the company decides whether to offer fixed prices per kWh, prices indexed to the wholesale market with its own margin, flat rates, special schedules, etc. There is no single imposed methodology.
• Contractual freedom: permanency clauses, promotional discounts, added services (maintenance, insurance, etc.), or packages with other supplies (gas, telecommunications) can be included.
• Competition: companies compete on price, conditions, and services, which in theory should benefit the informed consumer.

Key differences for the consumer

1. Price formation and volatility

In PVPC, the cost is directly linked to the evolution of the wholesale market: if the pool price rises, the bill rises; if it falls, the consumer benefits. This introduces a risk of high prices in times of stress (e.g., energy crises), but avoids opaque commercial margins.

In the free market, prices can be more stable: a fixed-price contract per kWh protects against sudden wholesale market increases but also prevents taking advantage of sharp drops. Additionally, the retailer's margin is incorporated into the price, and it is not always easy to compare it with PVPC.

2. Who offers each tariff

PVPC is only offered by reference retailers subject to specific obligations and controls. Free market offers are provided by both large groups and small independent retailers, with very diverse commercial strategies.

3. Type of contract and added services

PVPC is a fairly standardized product: without mandatory ancillary services, with regulated price structure and less contractual complexity. In the free market, by contrast, companies can link electricity to other services (maintenance, emergencies, inspections), apply permanency clauses or discount conditions subject to terms or combined packages.

4. Risks and advantages

For the domestic consumer:

• PVPC: greater exposure to market volatility, but greater alignment with the real wholesale price and more transparency about how the cost is formed. It is the gateway to some social policy measures and is usually easier to compare.
• Free market: greater stability if fixed prices are contracted and possibility of competitive offers, but risk of overpaying if conditions are not well compared or if added services increase the bill in a non-transparent way.

Political and regulatory dimension

The coexistence of PVPC and free market is part of the design of Spanish and European energy policy: on one hand, to protect small consumers through a regulated tariff and, on the other, to promote competition among retailers. Regulatory changes on how PVPC is calculated or on the information that free market companies must provide are political decisions with direct impact on the energy cost for households.