Free electricity this Saturday, but with VAT 21%:

This Saturday, millions of Spaniards will have free electricity for most of the day. Producing electricity using renewable technologies will mean that the most expensive plants will have little or no need to sell electricity into the grid, resulting in prices that would have been unthinkable just a year and a half ago.

In particular, during the entire morning and part of the day, the price per megawatt hour will be practically free. (0.01 euro). The average cost for those customers covered by the government-regulated tariff will be just four euros. According to official data from the Ministry of Ecological Transition, more than 10 million people They take advantage of this opportunity.

These prices have been repeating since the beginning of the year, and you can expect MWh to exceed the €45 mark in 2024, which is not an easy figure.

During the worst months of the energy crisis, the executive branch of Pedro Sánchez passed a law to reduce VAT on electricity bills, provided that the MWh did not exceed the aforementioned 45 euros. Thus, from March 1 last year, 21% of value added tax was refunded. In particular, February with an average price of 40 euros per MWh according to the Iberian Electricity Market Operator (OMIE).

Overall, VAT at 21% looks set to be set in the coming months. Electricity futures show MWh prices will be below 40 euros until June due to weaker demand in Spain’s electricity system, which is showing signs of depletion.

For the state, this measure is a breath of fresh air in revenue collection. Experts from the Ministry of Finance (Gestha) have calculated that reducing taxes on gas and electricity will cost more than 14,000 million euros between 2021 and 2023. To this we must add the cost of these tax breaks in the first half of 2024. From a consumer perspective, a 21% VAT refund would mean an increase of €62 per year on the average user’s bills, according to OCU. .

According to data from various consumer platforms, the average household with a regulated tariff – the so-called PVPC – with a capacity of 4.6 kW and a monthly consumption of 292 kWh will pay 51.64 euros per month. February, but if consumption in March is taken into account, the VAT applied will be 21% and the bill will rise to 56.81 euros.

Winning clients

The context that exists in the electricity market does not benefit everyone equally, and those customers who signed a bilateral contract with their supplier months ago are winning the game over those who benefit from the PVPC.

The reason is simple. For users with PVPC, with the MWh price now set below €45, the reduction will not be carried forward immediately as their bill calculation has recently been changed.

Thus, 75% of the price will be determined by the daily price, the rest (25%) will be distributed between the monthly, quarterly and annual futures markets.
In January 2025, the daily market will contract by 15 points, leaving the daily market share at 60% and the futures market at 40%. In 2026, the PVPC calculation will take a final format in which 45% will be dependent on the daily market and the remaining 55% will be distributed among three other markets.

In particular, when using the old method, which did not include this futures adjustment, the bill for PVPC will be 47.10 euros. with VAT 10% -51.8 euros with VAT 21%-. That is, the adjustment in the futures market this month made the bill more expensive by 10% (4.53 euros).